GIFT 
!  39  1914 


Workmen's    Compensation 
and   Insurance 


in 


France,  Holland  and  Switzerland 


A  Series  of  Letters 

by 
Harold  G.  Villard 


Revised  and  Reprinted 
January,  J9J4 


Workmen's  Compensation 
and  Insurance 


in 


France,  Holland  and  Switzerland 


A  Series  of  Letters 

t>7 
Harold  G.  Villard 


Revised  and  Reprinted 
January,  J9J4 


The  following  letters,  written  from  various  points  in  Europe,  be- 
tween July,  1912,  and  June,  1913,  contain  the  results  of  studies  of  the 
practical  operations  of  the  French,  Dutch  and  Swiss  workmen's  in- 
surance laws,  besides  a  brief  discussion  of  the  recent  Swiss  legislation, 
which  is  not  yet  in  effect.  No  attempt  is  made  at  a  complete  analysis 
of  the  various  statutes  discussed.  For  that  information  the  reader 
should  consult  the  Reports  and  Bulletins  of  the  United  States  Bureau 
of  Labor. 

In  this  reprint  a  number  of  corrections  and  of  additions  to  the  statis- 
tical data  have  been  made. 

HAROLD  G.  VILLARD. 

205  West  57th  Street,  New  York. 
December,  1913. 


678980 


CONTENTS. 


French  Accident  Compensation  Law:  Page. 

Experience   thereunder — Principles   and   Objects    of   the   Law — 

Misconstruction — Growing   Abuses    7 

Insurance  thereunder — Self,  State,  Co-operative  and  Corporate 
Insurance — State  Insurance  not  in  favor — Showing  of  Pri- 
vate Companies — State  Monopoly  Idea  15 

Principal   Abuses  thereunder — Increased  Cost — Litigation   over 

and  Pensions  for  Trifling  Injuries — Medical  Abuses 23 

French  Sickness  Insurance  Law: 

Voluntary  Mutual  Associations — Government  Subsidies — Recent 

Progress  and  Growing  Importance — Defects   33 

French  Old  Age  Pension  Law: 

Reasons  for  its  Non-Success  and  Unpopularity  39 

Dutch  Accident  Compensation  Insurance  Law: 

How  Compensation  Insured — Functions  performed  by  the  State 

— Extent  of  Abuses — Some  Defects  ..." 42 

State    versus   Private    Insurance — Higher    Cost   and    Disadvan- 
tages of  Former — Disappearance  of  Self  Insurance,  Eclipse 
of  Corporate  Insurance  and  Rise  of  Mutual  Insurance  ....     48 
Dutch  Experience  in  Agricultural  Accident  Insurance: 

Voluntary — In  Mutual  Associations — Favorable  Experience    ...     60 
Recent  Swiss  Workmen's  Insurance  Legislation: 

Good  and  Weak  Points  of  the  Measure — Peculiar  and  Novel 
Features,  and  Reasons  therefor — The  Sickness  Insurance 

Law — The  Accident  Insurance  Law 63 

Swiss  Experience  in  Military  Insurance: 

An  Instructive  Ten  Year  Test  of  State  Insurance — Unfavorable 

Experience    78 


FRANCE 


Experience  Under  the  Workmen's  Accident  Compensation  Law.* — Prin- 
ciples and  Objects  of  the  Law. — Misconstructions. — Grow- 
ing Abuses. 

Following  the  example  set  by  Germany  in  1884,  practically  all  the 
leading  industrial  nations  of  Europe  have,  since  then,  passed  laws  af- 
fecting the  compulsory  insurance  of  workmen  against  accidents  arising 
in  the  course  of  their  employment.  As  is  well  known,  this  form  of 
legislation  has  all  been  based  on  the  same  general  theory  of  partial 
reparation  and  of  a  division  of  the  loss  arising  from  the  accidents  be- 
tween masters  and  workmen.  Instead  of  employers  being  liable,  as 
heretofore,  only  in  cases  where  negligence  could  be  imputed  to  them, 
they  are  obliged  to  indemnify  victims  of  accidents  in  all  cases.  On 
the  other  hand,  employees  injured  through  no  fault  of  their  own  re- 
ceive, not  full,  but  only  partial,  compensation,  while  those  at  fault 
have  their  loss  in  earnings  made  partially  good,  instead  of  receiving  no 
redress  from  their  patrons,  as  was  the  previous  custom. 

In  every  case,  workmen  are  to  forego  full  compensation,  and  in  no 
instance  are  employers  to  be  mulcted  to  the  full  extent  of  their  previ- 
ous liability.  To  relieve  the  laborer  from  all  loss  or  penalty  in  case 
of  accidents,  one-half  of  all  of  which  are  usually  due  to  his  negligence, 
would  throw  an  unfair  burden  on  the  employer,  and  would  tend  to  de- 
moralize the  workman  by  making  him  indifferent  or  careless.  In  order 
to  prevent  the  simulation  of  accidents,  and  to  make  the  victims  anxious 
for  their  hurts  to  heal  quickly,  an  employee  should  never  be  allowed 
to  turn  an  injury  into  a  source  of  profit.  The  accident-insurance 
statutes  were,  therefore,  purposely  intended  to  be  only  partially  repara- 
tive,  and  were  not  meant  to  be  a  means  of  bestowing  alms  or  charity 
on  any  one. 

What  the  Object  Is. 

In  discussing  this  class  of  legislation,  another  fact  should  be  borne 
in  mind,  namely,  that  its  object  is  not  to  make  amends  for  the  mutila- 
tion or  disfigurement  of  the  human  body,  but  merely  to  compensate  in 


*Reprinted  from  New  York  Evening  Post  of  March  29,  1913,  by  per- 
mission. 


part  for  any  reduction  in  wages  resulting  from  that  loss.  A  victim 
may  be  terribly  seared  and  scarred,  but  he  is  not  entitled  to  receive 
any  satisfaction  for  the  loss  of  his  good  looks,  unless  accompanied  by 
a  diminution  in  his  wage-earning  capacity.  No  sentimental  reasons,  but 
purely  business  principles,  should  be  applied  in  the  interpretation  of 
accident  insurance  statutes.  The  probable  salary  after,  as  compared 
wi'r-h:  that;  £ar»etl  before  the  occurrence  of  the  injury,  should  be  the 
basis  oh-  wHitrh"  any  compenoation  is  to  be  estimated.  In  the  considera- 
tion of  French  or  any  other  legislation  on  accident  insurance,  these 
general  rules  or  observations  should  be  kept  in  mind. 

When  the  French  statute  was  passed  in  1898,  its  sponsors  clearly 
understood  that  it  was  based  on  the  idea  of  give  and  take.  As  one 
Senator  defined  it:  "The  law  is  in  the  nature  of  a  bargain;  for,  if  it 
obliges  the  head  of  an  industrial  undertaking  to  make  good  the  loss  in- 
curred by  the  victim,  without  inquiry  as  to  the  cause  of  the  accident, 
on  the  other  hand,  it  only  makes  the  patron  responsible  for  a  part  of 
the  damage  suffered." 

Unfortunately  this  original  basis  of  the  law  has  been  more  and 
more  lost  sight  of,  and  the  tendency  is  to  construe  and  amend  the  act 
as  though  intended  to  make  the  employers  the  ones  to  be  held  re- 
sponsible for  any  damages  resulting  from  accidents.  Disregarding  the 
fact  that  the  employees  were  to  share  the  burden,  too,  both  courts  and 
legislature  are  daily  more  inclined  to  interpret  and  to  change  the  law 
so  as  to  aid  the  injured  as  much  as  possible  in  their  efforts  to  obtain 
compensation  from  their  superiors.  The  statute  has  come  to  Joe  re- 
garded more  as  a  species  of  class  legislation  and  as  a  measure  directed 
against  the  employers  in  the  interests  of  the  workingmen.  Hence  the 
feeling  that  the  poor  and  unfortunate  should  be  favored  whenever  pos- 
sible in  their  attempts  to  recover  from  the  well-to-do  masters  and  that 
the  employees  and  physicians  are  acting  quite  legitimately  and  entirely 
within  their  rights  in  endeavoring  to  turn  the  law  into  as  great  a 
source  of  pecuniary  profit  to  themselves  as  possible. 

Other  Grave  Evils. 

Besides  becoming  thereby  a  socialistic  instrument  of  oppression, 
this  narrow  construction  of  the  law  has  entailed  other  grave  evils.  The 
laborer  no  longer  looks  upon  an  injury  solely  as  a  great  misfortune;  his 
principal  thought  now  is  how,  by  exaggeration  or  otherwise,  to  make 
his  hurts  produce  for  him  the  largest  monetary  return.  Forgetting  the 
place  assigned  to  him  of  impartial  arbiter  between  conflicting  interests, 
the  physician  has  assumed  the  law  to  have  been  enacted  for  his  pecu- 
niary benefit,  too,  and  feels  justified  in  swelling  his  charges  for  treat- 
ment to  the  maximum  possible  amount,  basing  his  attentions  more  ac- 
cording to  the  size  of  the  employer's  purse  than  to  the  victim's  station 
in  life.  Lastly,  the  reform  of  the  law  and  the  doing  away  with  abuses 
has  become  very  difficult,  because  the  radical  socialistic  majority  in 
the  Chamber  of  Deputies  is  disinclined  to  adopt  any  amendment  urged 

8 


by  employers,  fearing  that  it  may  in  some  measure  interfere  with  or 
curtail  the  rights  or  privileges  of  the  workingmen.  Indeed,  the  ten- 
dency is  all  the  other  way — to  let  down  the  barriers  still  further  and 
to  facilitate  the  mulcting  and  exploitation  of  the  employing  class. 

Passing  now  to  the  interpretation  of  the  law  in  French  courts,  com- 
pensation in  cases  resulting  in  permanent  partial  disability  is  fre- 
quently erroneously  based  on  the  bodily  injury  received.  A  workman 
in  a  textile  industry,  we  will  say,  meets  with  an  accident  entailing  the 
loss  of  the  forefinger  of  his  right  hand.  When  the  wound  is  healed, 
the  attending  physician  certifies  that  the  victim  is  suffering  from  a 
permanent  injury  which  can  never  change  or  improve.  On  this  state- 
ment, the  Court  issues  a  decree  naming  the  sum  the  workman  is  to  re- 
ceive. Now,  while  the  loss  of  the  finger  was  susceptible  of  reducing  the 
workman's  earnings,  he  might  yet  in  time  have  been  able  so  to  train 
his  other  fingers  that  the  output  of  his  machine  would  be  as  great  as 
before,  and  to  earn  the  same  salary  as  he  originally  obtained,  in  which 
event,  of  course,  he  should  cease  to  receive  any  payment  on  account 
of  his  injury. 

By  being  governed  by  the  bodily  state  of  the  victim — by  making 
the  law  a  sort  of  pretium  doloris — and  in  overlooking  the  chance  of  the 
injured  party's  regaining  some  of  his  accustomed  skill  through  train- 
ing other  members  to  do  the  work  of  the  missing  part,  the  French 
courts  are  putting  a  much  heavier  burden  in  the  shape  of  compensation 
for  permanent  injuries  on  French  industrial  heads  than  is  the  case  in 
other  countries.  In  Germany,  for  example,  the  mutilation  of  the  work- 
man is  disregarded.  His  loss  in  earning  power  is  the  sole  criterion  of 
compensation — as  his  wages  rise,  the  latter  diminishes  or  ceases  al- 
together. 

\ 

Rulings  in  Minor  Accidents. 

In  the  matter  of  minor  accidents  involving  a  disability  of  10  per 
cent  or  less,  the  rulings  of  the  highest  court  is  again  placing  the  French 
employers  at  a  disadvantage,  as  compared  with  other  competitors.  In 
Germany  no  compensation  is  granted  in  such  cases — and  some  of  the 
lower  French  courts  have  followed  the  same  policy  up  to  a  5  per  cent 
limit.  Within  a  few  months,  however,  the  court  of  the  highest  jurisdic- 
tion has  decided  that  the  law  directs  the  payment  of  an  indemnity  in 
all  cases  where  the  disability  incurred  is  susceptible  of  causing,  under 
normal  conditions,  a  reduction  in  the  victim's  earning  capacity,  and 
that  it  fixes  no  minimum  below  which  an  indemnity  is  not  allowed. 
The  practice  of  refusing  compensation  in  accidents  of  minimum  im- 
portance on  the  ground  that  the  injury  received  is  not  susceptible  of 
causing  any  appreciable  reduction  in  the  injured  party's  earning  power 
is  condemned  and  held  to  be  erroneous. 

This  ruling  of  the  Cour  de  Cassation  appears  very  unfortunate  for 
many  reasons.  It  construes  the  law  from  a  narrow  point  of  view  and 
leaves  out  of  account  the  theory  of  reparation  and  the  broader  pur- 

9 


pose  of  the  statute.  Instead  of  holding  that  in  cases  of  inappreciable 
injury  and  of  small  fractional  reduction  in  wages  no  indemnity  is  due, 
the  court  preferred  the  view  that  every  hurt,  irrespective  of  size  or 
gravity,  must  be  compensated  for.  Not  the  question  of  monetary  loss, 
but  the  occurrence  of  an  injury  is  to  entitle  the  workman  to  damages. 

Now  the  fact  is  that  in  the  vast  majority  of  minor  accident  cases, 
the  workman  cannot  show  any  reduction  in  salary  in  consequence 
thereof.  Suppose  him  to  earn  fifty  cents  a  day,  and  to  lose  4  per 
cent  of  his  former  efficiency — he  will  not  be  put  in  a  class  by  himself 
at  48  cents,  but  will  continue  to  draw  his  full  pay  as  before.  To  pay 
the  slightly  injured  laborer  under  these  circumstances  is  to  bestow  an 
undeserved  gratuity  on  him  and  to  encourage  him  to  nurse  and  magnify 
the  smallest  contusions  which  were  unnoticed  before.  The  law  is 
twisted  from  its  original  intention  and  becomes  a  source  of  profit  to  the 
workman  with  an  insignificant  wound. 

This  regrettable  interpretation  is  certainly  bound  to  increase  the 
number  of  claims  for  petty  accidents,  which  were  excessive  enough  be- 
fore. In  1906,  almost  60  per  cent  of  the  accident  cases  settled  in  the 
courts  related  to  permanent  disability  of  10  per  cent  or  less,  which  in 
Germany  would  have  been  regarded  as  too  unimportant  to  be  worthy 
of  redress.  While  mulcting  the  employers,  this  insistence  on  compensa- 
tion in  minor  accident  cases  has  heretofore  proven  to  be  of  little  ulti- 
mate benefit  to  the  workmen  themselves.  Settlement  is  usually  made 
by  paying  the  victim  a  lump  sum,  which  he  is  only  too  apt  to  waste,  in- 
stead of  applying  his  award  to  a  good  purpose. 

Attention  has  already  been  called  to  the  difficulty  of  securing  any 
legislation  against  abuses  in  the  French  accident  insurance  law.  The 
proposals  of  the  employers  are  regarded  with  suspicion  and  only  one  of 
the  amendments  recommended  by  them  has  been  adopted  by  the  ap- 
propriate committee  of  the  Chamber  of  Deputies.  All  the  changes  op- 
posed by  them  have  been  almost  uniformly  adopted,  and  some  will  un- 
doubtedly be  finally  enacted  into  law. 

Crying  Evils  of  French  Law. 

Unquestionably,  the  most  crying  evils  in  the  French  law  are  due  to 
the  clause  giving  the  injured  workman  the  right  to  select  his  own 
physician  and  pharmacist.  Without  going  into  the  subject  at  length, 
it  is  sufficient  to  say  that,  owing  to  an  unholy  alliance  beween  the 
physicians  and  the  laborers,  the  employers  are  exploited  and  fleeced 
at  every  turn.  False  medical  certificates,  undue  prolongation  of  and 
unnecessarily  expensive  treatments,  simulation  of  injuries,  all  these  and 
other  dishonest  practices  are  resorted  to.  So  profitable  has  this  sort 
of  practice  become  that  many  doctors  in  Paris  actually  pay  the  patients 
who  present  themselves  for  treatment.  The  customary  rate  is  five 
francs  for  the  first  call  and  thereafter  a  daily  stipend  not  to  exceed  two 
francs  until  a  cure  is  effected.  In  the  end  the  employers  have  to  make 
good  these  improper  outlays  in  one  shape  or  another. 

10 


Physicians  will  at  their  own  expense  fit  up  clinics  for  the  handling 
of  accident  cases  among  trade-unionists,  and  rebate  to  the  union  with 
which  they  are  affiliated  from  25  to  50  per  cent  of  the  fees  collected. 
Under  the  system  of  free  choice,  the  workman  suffers  in  that  when 
injured  he  seeks  the  practitioner  who  will  pay  him  the  largest  retaining 
fee  instead  of  the  one  most  skilled,  who  will  cure  him  in  the  shortest 
possible  time.  The  employer  loses  through  being  swindled  and  over- 
charged. 

In  the  face  of  such  patent  abuses,  common  sense  would  indicate 
that  the  most  efficacious  remedy  would  be  to  have  only  the  employers 
name  the  physicians  in  accident  cases  so  that  those  who  have  to  meet 
the  medical  costs  should  have  the  means  of  controlling  them.  No 
harm  could  come  to  the  workingman  for  it  is  in  the  master's  interest 
too  that  any  one  injured  be  restored  to  health  in  as  brief  a  period  as 
possible.  But  the  French  legislator  is  too  timid  to  follow  any  such 
course,  or  to  restrict  the  laborer's  liberty  or  freedom  of  choice  in  any 
respect.  Instead,  a  sort  of  half-way  measure  is  finding  favor  and 
stands  the  best  chance  of  enactment,  which  calls  for  the  appointment  of 
two  physicians  in  all  accident  cases — one  to  represent  each  side.  Ex- 
perience alone  would  show  how  far  this  change  would  affect  the  pres- 
ent abuses  and  whether  it  would  reduce  the  item  of  medical  costs  ap- 
preciably or  not.  Restricting  the  choice  of  physicians  to  the  employers 
would  be  a  much  more  direct  and  efficacious  way  of  controlling  and 
getting  rid  of  the  now  existing  evils. 

How  the  law  is  losing  its  character  of  a  partially  reparative  meas- 
ure, where  both  masters  and  men  are  called  upon  to  share  the  loss,  is 
illustrated  again  in  the  change  already  made  and  further  proposed  re- 
garding the  period  which  must  elapse  before  the  injured  workman  re- 
ceives compensation.  In  the  original  act,  this  time  was  fixed  at  four 
days,  the  idea  being  that,  as  a  necessary  check  on  simulation  of  acci- 
dents, the  laborer  should  stand  the  loss  for  this  initial  period.  A  new 
distinction  was  made  in  1905,  however,  when  a  clause  was  inserted  pro- 
viding that  an  indemnity  was  due  from  the  first  day  on  in  cases  where 
the  length  of  disability  exceeded  ten  days. 

Effect  of  New  Indemnity  Clause. 

It  does  not  require  much  calculation  to  foresee  that  this  change  was 
bound  to  encourage  simulation,  and  to  result  in  a  decided  augmentation 
of  accidents  purporting  to  have  caused  disability  in  excess  of  ten  days. 
If  a  slightly  injured  laborer  resumed  work  on  the  fifth  day  he  would 
(allowing  for  a  Sunday)  have  earned  at  the  end  of  the  eleventh  day 
six  days'  full  pay.  By  claiming  continued  disability,  however,  he  would, 
under  the  law,  be  entitled  to  half  pay  for  eleven  days,  or  five  and  one- 
half  full  days'  pay,  or  practically  the  same  amount  he  would  gain  by 
working.  Consequently,  the  workman  is  under  every  stimulus  to  ex- 
aggerate the  extent  of  his  hurts,  and  not  to  resume  work  until  eleven 
days  or  more  have  expired.  That  the  alteration  in  the  law  has  had 

11 


-f 
-f 
-f 
-f- 


this  very  effect  is  strikingly  proved  by  the  following  table  of  the  length 
of  disability  in  accidents  settled  by  a  certain  group  of  French  insur- 
ance companies  in  the  year  just  before  and  in  the  year  directly  after 
the  change  in  the  law  was  made: 

Number  of  Accidents. 

Days  Difference. 

disabled.  1904.               1906.  Per  cent. 

5  ..................................  1,753  2,196  -f  25 

6  ..................................  2,448  2,931  +  20 

7  ................................  '  .  .  2,697  2,063  -  23 

8  ..................................  2,965  2,439  -  18 

9  ..................................  3,132  2,479  -  21 

10  ..................................  3,095  3,570                 +  15 

11  ..................................  3,037  6,799 

12  ..................................  2,909  6,625 

13  ..................................  2,866  5,850 

14  ..................................  2,814  4,216 

15  ..................................  2,802  4,837 

16  to  20  ............................  9,051  14,151 

21  to  30  ............................  8,349  12,443 

31  to  40  ............................  3,586  5,471 

41  to  50  ............................  1,771  2,560 

51  to  60  ............................  977  1,399 

61  to  70  .......  .  ....................  676  854 

Over  70  ............................  1,533  2,019 

50,461  82,902  +  47 

Total  No.  of  accidents  not  over  ten  days  16,090  15,678  3 

Of  total  number  accidents  (p.c.)    ......        32  19  -  13 

Over  10  days    ........................  32,853  67,224  -f  96 

Although  the  total  number  of  accidents  increased  47  per  cent  in  the 
two  years,  those  entailing  disabilities  of  ten  days  or  less  actually  showed 
a  decrease.  Instead  of  forming  almost  one-third  of  all  accidents,  they 
constitute  less  than  one-fifth.  The  most  striking  feature  in  this  table 
is,  of  course,  the  abnormal  increase  in  accidents  causing  a  cessation  of 
work  of  from  eleven  to  thirteen  days. 

Employers  Desire  Repeal. 

As  this  amendment  to  the  law  has  simply  resulted  in  grave  abuses 
and  encourages  the  workman  to  simulate  the  extent  of  his  injuries  and 
to  prolong  his  period  of  idleness,  the  employers  have  asked  for  its  re- 
peal. Far  from  their  wish  being  granted,  the  committee  of  the  Cham- 
ber has  just  voted  that  the  workmen's  compensation  shall  run  in  all 


-f  123 
-4-128 
-f  104 
-f  50 
-f  73 
56 
49 
53 
45 
-f  43 
+26 
-f  32 


12 


cases,  irrespective  of  the  length,  of  disability,  from  the  first  day.  In- 
stead of  remedying  a  flagrant  abuse  of  the  law,  they  would  facilitate 
its  generalization.  Even  in  the  French  Mutual  Aid  societies,  where  a 
close  inspectorship  is  maintained  and  self-interest  impels  the  members  to 
keep  tab  on  one  another,  it  has  been  found  necessary,  in  order  to 
guard  against  shamming,  to  refuse  any  sick  or  other  benefits  for  the 
first  two  days. 

If  no  limit  is  imposed  in  accident  cases,  what  way  of  preventing  a 
dishonest  employee  from  feigning  a  petty  accident  in  order  to  enjoy  a 
brief  holiday  on  half  pay?  If  all  barriers  are  removed,  the  present 
heavy  charges  imposed  on  the  employers  will  be  increased  at  least 
25  per  cent,  even  if  the  number  of  accidents  remains  the  same  as  now 
and  without  taking  into  account  any  possible  increase  through  dishonest 
practices  on  the  part  of  the  workmen.  Losing  sight  of  the  forfeitary 
principle  on  which  the  law  was  enacted,  the  committee  have  frankly 
stated  that,  in  their  opinion,  the  four  days'  provision  gave  the  masters 
an  unfair  advantage,  which  they  desired  to  see  done  away  with  as  in- 
equitable. Again  we  find  the  erroneous  conception  that  the  law  is  in- 
tended solely  to  ameliorate  the  condition  of  the  laboring  class  and  that 
only  the  employers  are  to  be  called  upon  for  sacrifices. 

If  the  removal  of  the  four-day  limit  will  put  a  premium  on  fraudu- 
lent practices  and  simulation,  the  same  is  true  of  another  measure 
favored  by  the  committee,  providing  that  in  case  the  victim's  injury  be- 
comes worse  or  aggravated,  the  payment  of  the  indemnity  allotted 
when  the  wound  was  declared  healed,  shall  be  suspended.  So  long  as 
the  new  period  of  treatment  lasts,  the  injured  party  is  to  draw  again 
instead  his  half-pay,  and  all  medical  and  pharmaceutical  expenses  are 
to  be  charged  to  the  employer.  The  objection  to  this  proposed  amend- 
ment is,  of  course,  that  it  makes  any  permanent  settlement  difficult, 
especially  in  cases  of  minor  accidents.  If  the  victim  with  a  small 
award  becomes  sick  or  is  thrown  out  of  work,  how  great  then  the  temp- 
tation to  claim  a  relapse  with  the  help  of  some  dishonest  physician  and 
to  draw  half-pay  until  employment  is  again  to  be  had.  In  times  of 
trade  depression  the  demands  for  a  revision  of  indemnity  would  foe 
especially  numerous. 

Where  Heirs  Profit  by  Death. 

Where  death  occurs,  the  accident  insurance  law,  as  revised  in  1905. 
grants  in  certain  cases  indemnity  to  such  of  the  victim's  ascendants 
as  can  show  that  they  were  dependent  on  him  for  support.  The  com- 
mittee has,  however,  just  voted  to  do  away  with  this  requirement,  in 
which  event  the  heirs  of  the  victim  would,  in  cases  where  they  had  not 
previously  received  any  of  the  earnings,  actually  profit  by  his  death. 
The  basis  of  the  present  law — the  idea  of  partial  reparation  for  an 
actual  money  loss  suffered — is  again  entirely  lost  sight  of.  On  what 
theory  except  that  it  is  a  statute  for  the  relief  of  the  poor,  should  an 
employer  of  a  workman  who  has  died  from  an  accident,  be  compelled 

13 


to  contribute  to  the  support  of  his  relatives,  to  whom  the  laborer  while 
alive  never  gave  any  part  of  his  wages? 

But  there  is  no  need  of  giving  any  further  instances.  In  brief,  it 
may  be  said  that  all  the  evils  against  which  an  ideal  law  on  the  sub- 
ject of  accident  insurance  should  guard,  are  to  be  found  in  France  to- 
day. Instead  of  being  eradicated,  abuses  are  being  strengthened  and 
multiplied.  The  burden  on  French  industry  is  steadily  mounting,  and 
bids  fair  to  be  radically  increased  in  the  near  future.  At  the  same  time 
the  demoralization  of  employees  goes  on  apace.  It  is  no  wonder, 
therefore  that  the  leaders  of  industry  look  forward  with  grave  ap- 
prehension as  to  what  the  future  has  in  store  for  them  as  regards  the 
compulsory  insurance  of  their  laborers  against  accidents. 

The  history  and  application  of  the  French  act  as  well  as  past  and 
prospective  changes,  all  emphasize  the  necessity,  in  the  interpretation 
of  accident  insurance  statutes,  of  keeping  clearly  in  mind  the  under- 
lying principles  on  which  this  form  of  legislation  was  originally  based. 
Once  the  idea  of  a  just  and  equitable  division  of  an  unavoidable  indus- 
trial loss  between  masters  and  workmen  is  lost  sight  of,  the  inevitable 
tendency  arises  to  construe  the  law  as  a  piece  of  class  legislation  di- 
rected against  the  employers  on  whose  shoulders  the  burden  must  be 
placed  wherever  possible.  If  the  mere  fact  of  injury  and  not  the 
actual  wage  loss  suffered  be  taken  as  the  ground  for  compensation,  the 
workman  obtains  a  false  conception  of  the  purpose  of  the  law  and 
seeks,  by  resorting  to  simulation  and  exaggeration  of  injuries,  to  de- 
rive a  profit  from  it.  The  ratification  of  abuses  becomes  increasingly 
difficult  because  the  laborer  resists  any  projected  legislation  which 
would  take  away  any  previously  secured  advantages,  even  if  improperly 
obtained.  Lastly,  where  a  wrongful  interpretation  prevails,  the  danger 
is  constantly  present  that  the  law  will  be  turned  more  and  more  into  a 
sort  of  poor  relief  measure  at  the  employer's  expense  with  the  conse- 
quent disappearance  of  the  idea  of  an  equitable  contribution  by  the 
workingmen. 


INSURANCE  UNDER  THE  FRENCH  ACCIDENT  COMPENSATION 

LAW.* 


Self,    State,    Co-operative    and    Corporate    Insurance. — Employer's    Op- 
tions.— State  Insurance  Not  in  Favor. — Showing  of  Private 
Companies. — State  Monopoly  Idea. 

With  the  passage  in  1898  of  the  law  making  the  insurance  of  work- 
men against  the  risks  of  their  employment  compulsory,  employers' 
liability  insurance  in  France  first  began  to  develop  on  an  important 
scale.  The  statute  leaves  entire  liberty  of  action  to  the  employer.  He 
can  either  be  his  own  insurer  or  have  himself  insured  directly  by  the 
State,  or  by  one  of  the  various  private  organizations  authorized  by  the 
Government  to  underwrite  employer's  risks.  A  large  number  of  em- 
ployers, with  nearly  one-third  of  all  the  workmen  affected  by  the  law 
in  their  pay,  have  preferred  not  to  take  out  any  outside  insurance,  but 
to  meet  their  own  accident  losses  as  they  occur.  As  five  out  of  every 
thousand  employers,  it  is  estimated,  will  fail  to  meet  their  workmen's 
liability  insurance,  the  Government  compels  all  employers  to  contribute 
to  a  special  guarantee  fund  to  make  good  losses  incurred  involving 
death  or  permanent  disability  to  employees.  If  the  trade  is  one  requir- 
ing a  license,  this  contribution  was  originally  fixed  at  4  per  cent  of 
the  license  tax;  if  not,  the  contribution  became  2  per  cent  of  the  total 
premium  paid  for  insurance.  If  the  employer  was  uninsured,  he  had 
to  pay  in  4  per  cent  of  the  face  value  of  all  accident  losses  incurred  by 
him,  as  they  arose. 

With  the  exception  of  1903,  the  guarantee  fund  has  yielded  each  year 
a  surplus,  the  total  of  which  reached  12,241,892  fr.  at  the  end  of  1911. 
In  view  of  this  comparatively  large  surplus,  the  annual  contributions 
are  to  be  determined  hereafter  on  a  sliding  scale  based  on  the  losses 
which  the  fund  was  called  upon  to  make  good  during  the  year  im- 
mediately previous,  but  in  no  case  are  they  to  exceed  the  figures  orig- 
inally fixed.  For  the  years  1906-11,  the  only  years  for  which  full 
statistics  are  available,  the  operation  of  this  guarantee  fund  shows  the 
following  results: 

Receipts    15,692,465.34 

Expenses  and  losses 8,171,704.05 

Losses  5,712,654.65 

Account  insured  employers 2,151,801.87 

Account  uninsured  employers 3,560,852.78 

Recovered  from  employers 2,201,511.71 

Recovered  from  insured  employers 1,970,166.37 

Recovered  from  uninsured  employers 231,345.67 

Net  losses  account  insured  employers 181,645.50 

Net  losses  account  uninsured  employers 3,329,507.11 


*Reprinted,  with  additions  and  changes,  from  New  York  Evening 
Post  of  April  5,   1913,  by  permission. 

15 


What  the  Figures  Rereal. 

These  figures  are  instructive  in  that  they  show  that  the  losses, 
which  the  fund  is  called  upon  to  meet,  are  much  larger — in  the  propor- 
tion of  seven  to  four  almost — for  uninsured  than  for  insured  employers. 
Furthermore,  nine-tenths  of  the  losses  assumed  for  the  insured  were 
afterward  recovered  against  only  6^  per  cent  for  the  uninsured,  show- 
ing that  the  chances  are  very  slight  of  recovering  any  sums  paid  out 
for  the  latter.  The  net  losses  in  the  six  years  on  account  of  uninsured 
employers  were  eighteen  times  as  great  as  those  on  account  of  those  in- 
sured. From  the  standpoint  of  affording  security  for  the  payment  of 
indemnities  to  victims  of  trade  accidents,  individual  insurance  by  em- 
ployers in  France  is  therefore  not  nearly  so  reliable  as  that  offered  by 
the  cooperative  societies  or  stock  companies. 

Next  in  order  may  be  mentioned  Government  insurance  against  ac- 
cidents as  conducted  by  what  is  termed  the  Caisse  Nationale  d' Assur- 
ance en  Cas  d'Accidents.  When  the  law  of  1898  was  enacted,  the 
authorities  feared  that,  if  left  without  any  official  competition,  the 
private  companies  engaged  in  employer's  liability  insurance  would 
form  a  combination  among  themselves  and  charge  excessive  rates. 
They  also  believed  that  the  companies  might  decline  certain  bad  risks, 
which  would  compel  the  employers  in  such  cases  to  be  their  own  in- 
surers unless  the  State  furnished  them  with  a  haven  of  refuge.  Both 
of  these  fears  have  proved  to  be  absolutely  groundless.  As  insur- 
ance by  the  State  was  intended  only  to  act  as  a  curb  on  and  as  a  sup- 
plement to  the  operations  of  the  private  companies,  the  Caisse  onl<y 
insures  employers  against  the  more  dangerous  forms  of  risks  involving 
death  or  permanent  disability.  No  profit  was  intended,  and  the  aim 
has  been  to  have  the  premiums  just  sufficient  to  coven  expenses  and 
losses. 

State  Insurance  Not  in  Favor. 

It  will  be  seen  at  a  glance  that,  unless  some  especial  inducements 
were  offered,  State  insurance,  covering  only  a  limited  number  of  acci- 
dents, would  not  be  apt  to  find  much  favor  with  employers,  as  com- 
pared with  that  of  an  insurance  company  protecting  against  every  kinr 
of  disability.  These  inducements  not  being  forthcoming,  Government 
insurance  against  accidents  has  always  been  a  negligible  factor  in 
France,  as  the  following  figures  will  show: 

Wages  insured,  francs. 

Private 
Year.  State.  organization. 

1901     10,561,853  2,828,498,832 

1902    15,558,196  2,949,882,941 

1903     17,071,954  3,056,854,767 

1904     21,869,159  3,149,993,700 

16 


1905  26,568,928  3,329,454,708 

1906  28,775,412  3,614,972,820 

1907  40,169,428  4,189,346,269 

1908  60,362,853  4,579,458,819 

1909  74,143,699  4,856,040,803 

1910  77,494,953  5,225,136,958 

1911  80,840,511  5,664,146,910 


Totals     453,416,946  43,403,787,522 

In  some  respects,  the  French  Government  has  a  decided  advantage 
over  individual  competitors.  It  confines  itself  to  death  and  permanent 
disability  cases,  the  cream  of  employers'  liability  insurance  in  France, 
where  the  percentage  of  such  accidents  per  1,000  workmen  has  remained 
stationary,  and  where  the  flagrant  abuses  which  have  developed  in  ac- 
cidents involving  only  temporary  disability  are  much  less  in  evidence. 
The  Government  has  no  commissions  or  agency  force  to  pay,  and  is 
under  no  expense  for  rent,  as  it  makes  use  of  already  existing  public 
buildings.  Consequently,  in  its  insurance  department,  the  expenses  for 
the  last  ten  years  have  averaged  only  8  per  cent  of  premium  receipts, 
as  against  26  per  cent  for  the  private  companies.  Yet  in  spite  of 
these  advantages,  the  Government,  has  not  made  as  good  a  showing  as 
the  latter. 

With  slightly  higher  premium  rates,  the  Caisse  d' Accidents  shows 
a  steadily  growing  deficit,  which  amounted  to  over  677,000  francs  at 
the  end  of  1910,  or  a  loss  of  1,763  francs  for  every  million  of  wages 
insured,  as  against  a  loss  of  666  francs  recorded  by  the  private  com- 
panies and  societies.  The  Caisse  should  have  raised  its  premium  rates 
8  per  cent  to  have  come  out  even,  while  the  companies  only  needed  to 
increase  their  premiums  3^  per  cent  in  order  to  have  attained  the 
same  result.  Most  unfavorable  is  the  Government's  showing  in  the 
item  of  legal  expense.  This  has  averaged  9.4  per  cent  of  all  losses  in- 
curred, as  against  less  than  4  per  cent  for  the  private  companies.  Evi- 
dently, the  latter  have  nothing  to  fear  from  the  competition  of  the 
State  with  its  staff  of  routine  officials,  lacking  all  initiative  and  adapt- 
ability. 

Classification  of  Corporations. 

The  Government  authorities  classify  the  various  corporations  and 
associations  insuring  against  accidents  to  workingmen,  into  four 
groups — French  stock  companies,  foreign  stock  corporations,  mutual 
insurance  associations  or  societies,  and  guarantee  or  trade  syndicates. 
These  last  are  simply  a  special  kind  of  mutual  societies.  In  order  to 
obtain  the  necessary  license  to  do  business,  a  stock  company  or  mutual 
society  must  make  a  preliminary  deposit  of  400,000  francs  with  the 
Government.  Thereafter  the  deposit  must  equal  2  per  cent  of  the 
wages  insured  in  the  year  preceding,  with  400,000  francs  as  a  minimum 
and  2,000,000  francs  as  a  maximum  amount.  If  the  company  only  in- 

17 


sures  one  kind  of  risks,  or  a  similar  group  of  trades,  or  binds  itself, 
where  accidents  occur,  to  purchase  all  annuities  or  pensions  for  the 
benefit  of  the  injured  through  the  Government  Caisse  Nationale  for 
Old  Age  Pensions,  the  required  deposit  is  reduced  one-half.  If  the 
company  agrees  to  both,  its  deposit  is  reduced  to  one-quarter.  At  the 
end  of  1900,  licenses  to  do  business  had  been  issued  to  21  foreign  and 
domestic  stock  companies  and  to  17  mutual  societies  and  guarantee 
syndicates.  On  December  31,  1911,  the  figures  were  23  and  40  re- 
spectively, the  number  of  stock  companies  remaining  almost  stationary, 
while  the  mutual  societies  and  syndicates  more  than  doubled.  In  spite 
of  this  marked  increase,  the  two  latter  combined  only  secured  30  per 
cent  of  the  total  business  transacted  in  1911,  as  compared  with  24  per 
cent  in  1901. 

The  following  table  shows  the  operations  of  all  the  companies  for 
the  years  1901-1911: 


Year.  Premiums. 

1901    52,451,438 

1902    54,048,626 

1903    59,874,899 

1904    63,871,456 

1905    73,045,711 

1906    81,785,576 

1907    98,386,328 

1908    105,068,828 

1909    112,564,406 

1910    122,154,812 

1911        134,045,529 


Loss. 

1901  4,514,675 

1902  10,115,765 

1903  2,247,019 

1904  +1,093,103 

1905  1,177,591 

1906  4,084,020 

1907  . 9,951,589 

1908  7,104,495 

1909  4,821,296 

1910  6,034,122 

1911  11,559,123 

Total 


Losses. 
43,525,140 
49,670,079 
46,313,476 
46,684,493 
57,356,945 
67,098,085 
85,669,427 
87,759,083 
91,179,757 
100,003,766 
114,419,789 

Sundry  profits, 
Interest,  losses 
recovered,  etc. 
307,936 
555,988 
1,504,892 
2,583,245 
2,733,528 
2,686,111 
2,914,877 
4,162,983 
4,739,904 
5,810,976 
6,851,015 


Expenses. 
13,440,973 
14,494,312 
15,808,442 
16,093,760 
16,866,356 
18,771,411 
21,678,490 
24,414,239 
26,205,945 
28,195,168 
31,184,863 


Net  loss. 

4,206,739 

9,559,777 

742,127 

+3,676,348 

+1,555,938 

1,397,809 

6,036,712 

2,941,512 

81,392 

233,146 

4,708,108 


Total. 

56,966,113 

64,164,391 

62,121,918 

62,778,353 

74,223,302 

85,869,496 

107,347,917 

112,173,322 

117,385,702 

128,198,934 

145,604,652 

Prem'm 
rate. 
1.854 
1.832 
1.958 
2.027 
2.193 
2.262 
2.352 
2.294 
2.318 
2.337 
2.375 


29,897,322 

With  the  exceptions  of  1904  and  1905,  every  year  shows  a  loss  for 
those  engaged  in  this  form  of  insurance.  For  the  eleven  years,  the  total 
amounts  to  over  twenty-nine  millions  francs.  The  heaviest  losses  oc- 
curred in  the  years  1902  and  1907.  The  rise  of  25  per  cei\t 


18 


in  the  average  premium  rate  during  the  period  covered  should 
also  be  noted.  In  1911,  the  various  organizations  have  again  met  with 
severe  losses. 

Contrasting  the  operations  of  the  various  groups  for  the  entire  ten 
years,  1901-1910,  the  following  figures  are  of  interest: 

Mutual  Stock  Syndi- 

cos.  cos.  cates. 

Average  premium   2.25  2.09  2.94 

Losses  to  wages  insured 1.92  1.67  2.66 

Losses  to  premiums   85%  80%  90% 

Expenses  to  premiums 17.8%  26%  21.5% 

For  1911  alone,  the  showing  is  as  follows: 

Mutual  Stock  Syndi- 

cos.  cos.  cates. 

Average  premium   2.58  2.28  2.69 

Losses  to  wages  insured 2.41  1.89  2.19 

Losses  to  premiums   93%  83%  81% 

Expenses  to  premiums 17.8%  25.5%  20.6% 

Private  Companies  Show  Best. 

It  is  evident  from  the  foregoing  tabulated  statement  that  the  private 
stock  companies  make  the  best  relative  showing.  Their  ratio  of  ex- 
pense is,  of  course,  higher  as  it  includes  commissions  to  agents,  which 
their  competitors  are  spared.  But  their  premium  rates  are  the  lowest, 
as  is  also  their  percentage  of  losses  incurred.  The  guaranty  syndicates 
have  fared  the  worst  of  all  as  regards  losses,  and  their  premium 
charges  are  by  far  the  highest.  During  the  ten  years  under  review, 
six  stock,  two  mutual  societies,  and  two  syndicates,  or  ten  units  in,  all, 
have  either  failed  or  ceased  to  write  employers'  liability  risks.  As 
this  branch  of  insurance  has  yielded  no  profits,  it  is  not  surprising 
to  find  that  the  number  of  stock  companies  engaged  therein  has  re- 
mained almost  stationary,  rising  to  only  twenty-three,  as  against 
twenty-one  in  1901.  Although  the  total  amount  of  wages  insured  by 
these  companies  is  70  per  cent  larger,  almost  the  entire  increase  has 
gone  to  twelve  of  the  bigger  companies.  Two  concerns  show  a  dis- 
tinct loss,  and  the  gains  of  the  other  nine  are  relatively  unimportant. 

As  to  the  mutual  societies,  they  record  a  gain  from  fifteen  to 
twenty-three  in  number  and  have  more  than  doubled  the  amount  of 
business  transacted  by  them.  But  the  major  part  of  this  gain  has 
been  absorbed  by  six  of  the  larger  societies.  Mutual  societies  to  carry 
on  an  insurance  business  can  be  formed  in  France  under  general  laws, 
and  the  consent  of  the  Government  authorities  is  not  required  thereto. 
They  must,  however,  just  as  in  the  case  of  the  stock  companies,  make 
a  deposit  with  the  Government  before  beginning  business,  and  are 

19 


obliged  to  collect  reserves.  They  can  issue  policies  either  with  fixed  or 
with  unlimited  premiums,  in  which  latter  event  the  premium  rate  is 
ultimately  fixed  by  the  amount  of  loss  incurred.  Members  cannot  be 
bound  for  a  longer  period  than  five  years,  at  the  end  of  which  time 
they  have  the  right  to  step  out  if  they  desire.  As  carried  on  in  France, 
the  mutual  societies  frequently  confine  their  operations  to  those  en- 
gaged in  one  certain  industry  or  located  in  a  given  industrial  area. 

The  Guarantee  Syndicates. 

In  permitting  the  establishment  of  guarantee  syndicates,  the  author- 
ities desired  to  make  it  easy  for  the  smaller  trades-people  and  em- 
ployers of  minor  importance  to  secure  cooperative  insurance  against 
workingmen's  accidents,  just  as  the  mutual  societies  provide  it  for 
the  larger  industrial  plants.  Thus,  for  example,  one  syndicate  had 
among  its  adherents  builders,  contractors,  barbers,  coffee-house  keepers, 
silk  weavers,  and  grocers. 

The  syndicates  must  have  their  regulations  and  governing  statutes 
approved  by  the  Government  before  they  can  commence  business.  On 
the  other  hand,  they  are  relieved  from  keeping  any  sum  on  deposit,  as 
in  the  case  of  the  other  organizations.  This  exemption  should  reduce 
their  expense  account,  as  no  interest  charge  on  capital  has  to  be  met. 
Two  kinds  of  syndicates  are  allowed.  One  insuring  5,000  laborers  or 
over,  working  for  ten  separate  employers,  as  a  minimum,  five  of  which 
at  least  must  have  no  less  than  300  laborers.  In  the  second  class,  per- 
mitted only  since  1906,  the  minimum  number  of  workmen  is  fixed  at 
2,000,  that  of  the  employers  at  300,  30  of  which  must  employ  at  least 
three  workmen  each. 

The  grave  objection  to  these  syndicates  is  the  fact  that,  unlike  the 
mutual  societies,  every  member  is  individually  responsible  for  any 
losses  incurred,  and  that  there  are  no  fixed  or  limited  premiums.  If 
the  provisional  premium  in  any  given  year  proves  too  low,  an  addi- 
tional percentage  can  be  levied  up  to  any  amount.  In  one  case,  the 
supplementary  premium  was  for  1907  95  per  cent  of  the  original  amount 
levied,  and  for  1908  65  per  cent.  Furthermore,  members  cannot  with- 
draw at  will,  but  are  bound  for  long  periods.  Unless,  therefore,  th,e 
syndicates  are  well  and  economically  managed,  this  form  of  employers' 
liability  insurance  may  prove  exceedingly  costly  to  those  participating 
therein. 

Record  Not  Inspiring. 

Unfortunately,  the  record  of  these  syndicates  has  not  been  such  as 
to  inspire  confidence.  As  has  already  been  stated,  their  average  prem- 
ium rate  since  1900  has  been  2.94,  as  against  2.25  and  2.09  for  the 
mutual  societies  and  stock  companies  respectively,  while  their  percent- 
age of  losses  sustained  is  the  highest  of  all  in  the  three  categories. 
The  latest  reports  of  the  Minister  of  Labor  respecting  their  operations 

20 


are  full  of  complaints  regarding  their  loose  bookkeeping  and  conceal- 
ment of  their  real  condition.  One  syndicate  reported  a  loss  of  358,603 
francs  in  fours  years.  Actually,  the  true  loss  proved  to  be  3,450,580 
francs,  or  almost  ten  times  as  great  as  at  first  stated.  Doubtful 
amounts,  like  overdue  premiums  from  members,  are  put  down  as  though 
a  cash  asset,  and  losses  are  underestimated.  Those  of  the  syndicates  for 
1909  were  understated  1,332,423  francs,  against  an  overestimation  of 
1,052,507  and  of  4,223,545  francs  for  the  losses  sustained  by  the  mutual 
societies  and  stock  companies  respectively.  Several  of  the  syndicates, 
too,  are  behindhand  in  making  final  settlements,  exceeding  the  period 
of  grace  allowed  them  by  law. 

In  spite  of  their  relatively  poor  showing  and  high  rates,"  the  num- 
ber of  guarantee  syndicates  has  of  late  years  shown  a  remarkable 
growth.  Starting  with  a  total  of  three  in  1906,  there  were  seventeen 
transacting  business  on  January  1,  1911.  This  anomaly  is  explained  by 
the  fact  that  unscrupulous  promoters  find  a  good  field  for  the  ex- 
ercise of  their  talents  in  the  formation  of  these  syndicates.  No  capital 
is  required  to  start  them,  all  that  is  necessary  is  to  drum  up  a  suf- 
ficient number  of  adherents.  By  misrepresentations  as  to  the  cost  of 
insurance,  this  is  a  comparatively  easy  matter.  With  the  statutes  or 
by-laws  so  drawn  that  the  governing  board  names  its  own  successors, 
without  the  members  having  any  voice  therein,  the  promoters  are  en- 
abled to  keep  the  management  in  their  own  hands.  As  the  Minister  of 
Labor  in  one  of  his  reports  warningly  said:  "It  is  hard  to  conceive, 
besides,  of  the  imprudence  of  heads  of  industrial  establishments,  who 
affiliate  themselves  with  such  guarantee  syndicates  without  observing 
that,  under  the  guise  of  purely  mutual  insurance,  they  in  reality  only 
constitute  a  lucrative  form  of  insurance  exploitation  on  the  part  of  the 
promoters  for  their  own  personal  profit." 

How  true  this  statement  is  appears  evident  from  the  following 
figures  taken  from  the  account  of  certain  guarantee  syndicates  for 
1909: 

Total  Per  Cent. 

Premiums.  Expenses.  of    Premiums. 

228,286.80  114,133.30  40 

223,136.15  94,120.19  42 

81,933.85  40,452.20  49 

34,832.28  34,723.25  100 

The  smaller  the  amount  of  business  transacted,  the  higher  the  ex- 
pense ratio  is  apt  to  be. 

A  Declining  Tendency. 

Despite  their  large  increase  in  number,  the  total  business  transacted 
by  the  guarantee  syndicates  shows  a  declining  tendency.  The  highest 
figure  was  reached  in  1907,  when  the  sum  total  of  wages  underwritten 
was  331  millions  of  francs.  For  1911  the  figure  was  only  294  millions. 

21 


Premiums  dropped  from  10  Vi  to  8  millions.  Three  only  of  the  syndi- 
cates do  business  on  a  large  scale,  and  one  of  these  went  into  volun- 
tary liquidation  at  the  end  of  1910  on  account  of  excessive  losses.  In 
1908  these  three  obtained  four-fifths  of  the  total  business,  the  other 
fifth  being  divided  among  twelve  syndicates,  with  an  average  premium 
income  of  only  140,000  francs.  And  with  one  of  the  large  syndicates 
finding  it  more  advantageous  to  go  out  of  business,  with  the  minor  ones 
operating  under  an  excessive  expense  ratio  and  not  in  fulfilment  of  any 
public  want,  frequently,  but  more  for  the  purpose  of  affording  salaries 
to  their  managers,  the  chances  are  all  against  the  guarantee  syndicates 
obtaining  much  in  the  way  of  new  business  hereafter. 

While  the  utmost  freedom  of  choice  has  heretofore  prevailed  in  the 
field  of  employers'  liability  insurance  in  France,  it  should  be  stated  in 
conclusion  that  there  is  a  more  or  less  determined  effort  being  made 
to  make  the  insurance  business  in  all  its  branches  a  state  monopoly. 
If  such  a  movement  should  succeed,  accident  insurance,  where  the 
state  is  already  a  competitor,  will  in  all  probability  be  one  of  the  first 
branches  to  be  taken  over.  That  the  state  in  such  an  event  would 
give  better  or  cheaper  service  than  any  of  the  existing  organizations  is 
not  at  all  likely,  if  one  may  judge  by  the  operations  to  date  of  the 
Caisse  d' Accidents.  But  everything  takes  time  in  France,  and  appar- 
ently a  considerable  period  will  elapse  before  such  a  step  is  undertaken. 


PRINCIPAL    ABUSES    UNDER    FRENCH    ACCIDENT   COMPENSA- 
TION LAW.* 

Increased   Cost. — Litigation  Over  and  Pensions  for  Trifling  Injuries. — • 

Medical  Abuses. 


Since  its  first  introduction  in  1898,  the  scope  and  extent  of  the 
French  Accident  Insurance  law  has  been  greatly  widened  and  increased. 
While  the  sum  total  of  wages  insured  under  the  act  has  thus  been 
greatly  augmented,  complaint  is  heard  on  all  sides,  from  employers,  of 
the  disproportionate  gain  relatively  in  the  number  and  cost  of  acci- 
dents incurred,  for  which  indemnity  must  be  paid  and  which  is  en- 
tailing each  year  a  constantly  mounting  burden  on  the  French  indus- 
trial world.  That  this  complaint  is  well  founded  will  appear  from  the 
following  figures: 


Total  wages 

insured. 
Year.  Francs. 

1901  2,828,498,832 

1902  2,949,882,941 

1903  3,056,854,767 

1904  3,149,993,700 

1905  3,329,454,703 

1906  3,614,972,820 

1907  4,189,346,269 

1908  4,579,458,819 

1909  4,858,040,803 

1910  5,225,136,958 

1911  5,644,146,910 


Thus,  while  from  1901  to  1910,  the  number  of  workmen  insuredf  rose 
from  3,614,000  to  4,728,000,  or  a  gain  of  31  per  cent,  and  the  total 
wages  insured  increased  85  per  cent,  the  total  number  of  accidents 
causing  losses  increased  80  per  cent,  and  the  amount  of  losses  sus- 
tained more  than  doubled,  or  gained  130  per  cent.  On  the  other  hand, 
the  number  of  accidents  per  1,000  workmen  insured  increased  in  the 
same  period  37  per  cent,  and  the  losses  incurred  per  1,000  workmen  75 
per  cent,  or  practically  three-fourths. 

*Reprinted  with  additions  and   changes  from   New  York  Evening 
Post  of  April  12,  1913,  by  permission, 
f  Number  of  workmen  insured — 


Acci- 

Total  losses 

dents  per 

incurred 

No.  of 

1,000 

Francs. 

accidents. 

men. 

43,525,140 

229,162 

63.4 

49,670,079 

223,286 

60.6 

46,313,476 

212,753 

54.9 

46,684,593 

222,124 

52.8 

57,356,945 

259,828 

61.3 

67,098,085 

306,860 

70.7 

85,669,427 

359,747 

80.1 

87,759,083 

354,027 

77.9 

91,179,757 

383,249 

82.9 

100,003,766 

412,278 

87.2 

114,419,789 

1901—3,614,000 
1906—4,340,000 
1907—4,440,000 


1908—4,544,000 
1909—4,624,000 
1910—4,728,000 


23 


Nature  of  Accidents. 


The  following  tables  throw  some 
the  accidents  incurred: 


interesting  light  on  the  nature  of 


Permanent    Temporary  Unclassi- 

Year. 

Total  No.         Deaths,     disability.       disability. 

fied. 

1905     

259,882 

1,470 

4,589 

250,649 

3,174 

1906 

306,860 

1,499 

4,655 

296,339 

4,367 

1907 

,    359,747 

1,762 

5,191 

347,911 

4,883 

1908 

354,027 

1,609 

5,018 

342,017 

5,383 

1909     

383,249 

1,660 

5,121 

371,198 

5,270 

1910     

412,278 

1,650 

5,452 

399,769 

5,407 

(Accidents 

per  1,000 

workmen.) 

1901-3     .... 

62. 

.3 

1.1 

59.5 

1.1 

1905 

61.3 

.35 

1.1 

59.1 

.75 

1906    

70.70 

.35 

1.07 

68.38 

1. 

1907 

80.10 

.39 

1.15 

77.46 

1.1 

1908 

,     77.9 

.35 

1.15 

75.2 

1.2 

1909 

82.9 

.35 

1.1 

80.32 

1.12 

1910 

87.2 

.35 

1.15 

84.56 

1.14 

It  is  to  be  noticed  that  deaths  and  permanent  disability  cases  show 
practically  no  change  in  percentage  throughout.  The  temporary  dis- 
ability or  minor  accident  cases  are  therefore  alone  responsible  for  the 
almost  uniform  rise  in  the  number  of  accidents  per  thousand  workmen. 

The  following  statement  of  how  the  cases  decided  by  the  courts 
since  the  inception  of  the  law  have  been  distributed,  is  likewise  very 
illustrative: 


Year. 
1899  ... 

No.  of 
cases. 
899 

Deaths. 
534 

P.  C. 
59.4 

Perma- 
nent dis- 
ability. P.  C. 
13    1.4 

Partial  dis- 
ability. 
352 

P.C. 
39? 

1900  

6,543 

1,562 

23.9 

139    2.1 

4,842 

74 

1901  

10,627 

1,729 

16.3 

227    2.1 

8,671 

81  6 

1902  

12,241 

1,613 

13.2 

198    1.6 

10,430 

85? 

1903  

13,853 

1,524 

11. 

179    1.3 

12,150 

877 

1904 

15303 

1  560 

10.2 

197    1.3 

13,546 

88.5 

1905 

19,802 

2,138 

10.8 

171     .9 

17,493 

88.3 

1906 

24,547 

3,144 

12.8 

149     .6 

21,254 

86.5 

1907     .  .  . 

26,138 

2,413 

9.2 

141     .5 

23,584 

90.2 

1908  

29,632 

2,491 

8.4 

156     .5 

26,985 

91  1 

1909  

28,300 

2,395 

8.4 

137     .4 

25,768 

91. 

1910  

30,266 

2,450 

8. 

128     .4 

27,688 

91  4 

1911  

33,088 

2,613 

7.9 

139     .42 

30,336 

91  7 

1912  

37,433 

2,828 

7.5 

144     .4 

34,461 

92.1 

It  is  again  to  be  noticed  that  the  percentage  of  cases  involving  only 
partial  disability  shows  an  almost  uninterrupted  increase,  rising  in  ten 

24 


years  from  74  per  cent  to  over  92    per   cent,    while   the   proportion    of 
deaths  and  permanent  disability  cases  shows  an  almost  uniform  decline. 

Infrequent  Appeals  to  Courts. 

At  this  juncture  it  should  be  stated  that  employers  in  France  have, 
as  a  rule,  not  raised  any  unnecessary  difficulties  regarding  the  en- 
forcement of  the  Accident  Insurance  law.  It  has  been  accepted  in  a 
loyal  spirit  and  appeals  to  the  courts  are  infrequent.  Since  the  law 
went  into  effect,  out  of  a  total  of  2,963,368  accidents  reported  up  to 
the  end  of  1910,  all  but  218,151  were  settled  for  without  having  to  call 
in  the  help  of  the  courts.  Thirteen  out  of  every  fourteen  accident 
cases  are  thus  privately  settled  without  any  litigation  being  started. 
Nor  are  the  appeals  to  the  courts  becoming  more  frequent  relatively 
than  before  in  spite  of  the  much  larger  number  of  accidents  for  which 
claims  are  made.  The  general  feeling  on  the  part  of  employers  seems 
to  be  that  the  law  has  come  to  stay,  and  that  it  would  work  satisfac- 
torily provided  its  provisions  are  not  made  more  onerous  and  provided 
the  statute  could  be  amended  so  as  to  do  away  with  certain  faulty  pro- 
visions which  have  allowed  some  serious  and  grave  abuses  to  rise. 

Concerning  first  the  abuses  against  which  the  employers  are  pro- 
testing, we  find  much  complaint  over  the  attitudes  of  the  courts  in 
granting  small  life  pensions  of  10,  20,  and  30  francs  for  slight  injuries. 
This  tendency  to  grant  relief  for  minor  accidents  is  well  illustrated  in 
the  following  table  of  cases  judicially  settled  where  the  accidents  re- 
sulted in  permanent  partial  disability.  The  percentage  of  disability  has 
been  estimated  as  follows: 

5-10      10-20      20-30    30-40  40-50  Over  50  Vari- 
ous. 
4.8 

.5 


Year. 

5  P.  C. 

P.  C. 

P.  C. 

P.  C. 

P.  C. 

P.  C. 

P.  C. 

1899  
1900  

5.6 
10.5 

14.6 
17.8 

23.8 
25.5 

13.2 
11.7 

13.8 
11.2 

9.3 

7.8 

14.9 
12.9 

1901 

154 

21  2 

234 

11  2 

104 

69 

11 

1902 

1858 

23  26 

23  62 

10  26 

971 

5  63 

891 

1903  . 

22.7 

263 

21  5 

10 

76 

4.6 

7.3 

1904  . 

24.5 

267 

21.9 

8.9 

7. 

3.8 

7.2 

1905  

.   27.5 

258 

21  1 

8.8 

65 

3.7 

6.6 

1906  . 

32.1 

27.1 

18.3 

8.2 

5.6 

3.3 

5.4 

From  1899  to  1906,  of  all  accident  cases  decided  the  number  in- 
volving less  than  10  per  cent  disability  increased  from  20  per  cent  to 
60  per  cent,  or  a  percentage  increase  of  threefold,  while  the  percentage 
of  accidents  involving  more  than  10  per  cent  disability,  dropped  from 
80  to  40  per  cent.  Statistics  for  later  years  have  not  yet  been  published. 

Right  to  Choose  Physician. 

We  now  come  to  the  most  important  provision  objected  to  by  the 
employers  and  the  one  most  prolific  in  abuses,  namely,  the  section 

25 


giving  the  workman,  in  case  of  accident,  the  right  to  choose  his  own 
physician  and  pharmacist.  It  is  unquestioned  that  there  has  been  a 
regular  and  altogether  disproportionate  increase  in  the  cost  of  medical 
attendance  and  pharmaceutical  expenses  each  year.  The  following 
tables  show  this: 

Amt.  in  Amt.  in 

Year.  francs.  Year.  francs. 

1901    5,416,893  1907    12,587,214 

1902   6,464,425  1908   14,513,038 

1903   6,640,419  1909   15,586,235 

1904   6,947,212  1910   16,942,049 

1905  8,411,276  1911   20,357,038 

1906  10,533,987 

This  represents  the  following  percentage  of   the   total   amount   ex- 
pended for  accident  losses: 

Medical  expenses  Medical  expenses 

Per  cent.of  total  Per  cent,  of  total 

Year.  losses  incurred.  Year.  losses  incurred. 

1901   12445  1907 147 

1902   13617  1908 1652 

1903   14337  1909   1709 

1904   14881  1910 172 

1905 14667  1911   178 

1906 157 

For  every  100  francs  of  wages  insured,  the  cost  of  medical  expenses 
figures  out  as  follows: 

Year.  Franc.  Year.  Franc. 

1901  19151  1907 30046 

1902  21914  1908  31692 

1903  21723  1909  32096 

1904  22054  1910  32921 

1905  25263  1911  36067 

1906 29139 

The  average  cost  of  medical  attendance  in  accidents  involving  tem- 
porary disability  has  been  as  follows: 

Year.                                Francs.  Year.                               Francs. 

1901   12.95  1907  17.25 

1902   14.  1908  18.30 

1903   14.50  1909  19.55 

1904   14.80  1910  20.44 

1905   15.20  1911  21.58 

1906  15.90 

Thus  in  ten  years,  the  average  rate  has  increased  from  12.95  to  21.58 
fi-ancs,  or  two-thirds. 

26 


What  are  now  the  causes  for  this  steady  augmentation  in  the  cost  of 
medical  attendance  for  injured  workmen?  The  employers  unanimously 
ascribe  it  to  collusion  between  their  working  force  and  dishonest  or 
conscienceless  physicians  and  apothecaries.  As  a  proof  of  this,  they 
cite  the  fact  that  when  the  naming  of  the  physician  is  left  to  them, 
the  cost  of  treating  petty  accidents  averages  only  15  francs,  while  in 
the  case  of  physicians  selected  by  the  injured  persons  themselves,  the 
average  cost  will  run  from  50  to  60  francs. 

In  the  French  law,  a  very  important  role  is  assigned  to  the  physi- 
cian. If  an  accident  occurs,  he  has  to  furnish  an  initial  certificate 
setting  forth  the  victim's  injuries  and  the  estimated  duration  of  dis- 
ability. Later  on,  when  the  injuries  are  healed  or  their  permanent  ef- 
fects known,  he  is  called  upon  to  make  out  a  second  or  final  certifi- 
cate, which  is  of  controlling  importance  in  determining  the  amount  of 
compensation  to  be  paid  to  the  injured  party.  The  physician's  duty 
is  therefore  not  only  to  heal,  but  to  perform  a  social  duty  as  well — 
namely,  to  reconcile  the  conflicting  interests  of  employers  and  em- 
ployees, to  balance  the  scales  evenly  between  the  two  parties  and  to  see 
that  neither  side  obtains  an  undue  advantage  over  the  other.  It  is 
easy  to  see  therefore  that  the  successful  and  proper  administration  of 
the  law  depends  more  or  less  upon  the  manner  in  which  the  prac- 
titioners perform  the  functions  assigned  to  them. 

Surprising  as  it  may  seem,  the  French  doctors  appear  from  the  very 
start  to  have  lost  sight  of  the  fact  that  the  primary  object  of  the  new 
statute  was  humanitarian — to  see  that  unfortunate  workmen,  who  had 
been  injured  in  the  course  of  their  employment,  should  be  in  some  de- 
gree compensated  and  provided  for  instead  of  being  largely  left  in 
misery  and  want  as  heretofore.  The  physicians  have  regarded  the  law 
as  a  means  of  procuring  a  new  and  profitable  source  of  income  for 
themselves  for  services  which  they  had  formerly  been  glad  to  render  to 
a  great  extent  gratuitously. 

Clinics  and  Dispensaries. 

When  the  law  first  went  into  effect,  clinics,  and  dispensaries  for  the 
treatment  of  injured  workmen  were  at  once  established  by  some  of  the 
large  insurance  companies  and  by  the  heads  of  many  of  the  more 
important  industrial  establishments.  It  was  rightly  foreseen  that  vic- 
tims of  trade  accidents  could  be  treated  more  advantageously  and  more 
economically  in  a  large  institution  under  the  charge  of  specialists  than 
if  left  to  the  care  of  a  great  number  of  physicians  having  little  or  no 
experience  in  the  treatment  of  accident  cases.  Employers  used  all 
means  to  direct  their  injured  hands  to  these  clinics,  and,  if  they  would 
not  go  voluntarily,  pressure,  such  as  a  threat  of  refusal  of  further  em- 
ployment, was  undoubtedly  exerted  in  some  cases  to  force  their  com- 
pliance, until  forbidden  and  done  away  with  by  a  change  in  the  penal 
law  in  1905. 

Side  by  side  with  these    clinics  of    employers    and    insurers    arose 

27 


others  established  by  private  physicians  in  the  large  cities  and  indus- 
trial centres  for  the  exclusive  treatment  of  workmen's  accident  cases. 
Usually  these  were  started  by  young  and  unscrupulous  doctors  with 
little  standing  or  practice  and  indifferent  to  the  established  rules  of 
medical  ethics.  As  the  Accident  Insurance  law  made  the  employers  re- 
sponsible for  all  medical  costs  and  fees,  these  practitioners  foresaw 
that,  once  assured  of  a  clientage,  their  path  to  fortune  was  secure.  Ac- 
cordingly, while  self-advertising  is  deemed  highly  unprofessional  in 
the  best  French  medical  circles,  the  owners  of  these  private  clinics  have 
not  hesitated  to  use  the  most  flamboyant  and  often  dishonest  methods 
to  attract  to  their  establishments  workmen  who  have  been  injured  in 
the  course  of  their  employment.  Drummers  and  agents  are  posted  and 
employed  near  important  workshops,  whose  duty  it  is  to  steer  injured 
workmen  to  and  to  extol  the  merits  of  these  clinics.  The  clinics  them- 
selves are  painted  in  gaudy  colors,  flaring  advertisements  are  posted 
in  conspicuous  places,  circulars  are  sent  out  and  handbills  distributed 
among  the  working  classes.  Dressing  of  wounds,  massage,  electrical, 
radium,  and  mechano-therapeutical  treatments  are  offered.  Attention 
is  also  called  to  the  fact  that  attached  to  the  clinic  is  a  legal  bureau 
which  will  procure  the  maximum  indemnity  allowed  by  law  and  attend 
to  all  formalities  prescribed  for  the  procuring  of  the  same.  Certain  of 
the  clinics  have  even  gone  a  step  further  and  now  bestow  a  five-franc 
piece  on  an  injured  employee  when  he  first  presents  himself  and  allow 
him  a  daily  stipend  ranging  from  one-half  to  two  francs  a  day  so  long 
as  he  is  under  treatment.  With  such  inducements  held  out  to  them,  it 
is  not  surprising  that  the  workmen,  when  injured,  flock  to  these  private 
accident  clinics.  In  Paris,  more  than  half  of  all  accident  cases  are 
treated  in  them. 

Profits  of  the  Clinics. 

Knowing  of  the  heavy  expenses  these  clinics  are  put  to  for  adver- 
tising, employment  of  runners  and  often  for  allowances  to  the  patients 
themselves,  and  of  the  moderate  charges  prescribed  by  law  in  accident 
cases,  an  ordinary  outsider  might  suppose  that  these  establishments 
would  not  prove  very  profitable.  On  the  contrary,  they  pay  extremely 
well  and  are  increasing  in  number  from  year  to  year.  A  recently  pub- 
lished list  shows  31  in  Paris  alone.  Many  yield  an  annual  income  of 
over  50,000  francs,  a  very  large  sum  for  a  French  doctor  to  earn.  One 
physician  made  more  than  500,000  francs  in  a  few  years,  and  has  re- 
tired from  practice.  How,  one  asks,  is  this  possible?  The  answer  is 
very  simple — through  an  elaborate  system  of  dishonest  and  swindling 
practices  by  which  the  employers  and  insurance  companies  are  mulcted 
in  every  possible  way. 

To  begin  with,  these  clinics  have  as  their  main  object  not  the  quick 
and  speedy  healing  of  injured  patients,  but  rather  the  running  up  and 
manufacturing  of  the  maximum  possible  charges  and  claims  against  the 
employers.  To  this  end  every  possible  device  and  loophole  in  the  law* 

28 


is  taken  advantage  of.  Workmen  are  encouraged  to  exaggerate  and 
taught  how  to  simulate  injuries.  If  necessary,  false  medical  certifi- 
cates are  furnished.  The  treatment  is  prolonged  and  spun  out  for  as 
long  a  time  as  possible.  As  the  fees  are  low  which  can  be  charged 
under  the  law,  unnecessary  and  uncalled-for  dressings,  massage,  elec- 
trical and  radium  treatments  are  resorted  to.  These  are  charged  for  at 
doctors'  rates,  although  frequently  given  by  nurses  and  attendants.  A 
simple  visit  will  be  magnified  into  a  consultation. 

In  league  with  these  clinics  and  no  doubt  dividing  profits  with  them 
on  some  agreed  basis  are  certain  pharmacists  and  apothecaries.  The 
most  expensive  medicines  are  prescribed,  when  those  of  a  cheaper 
quality  would  serve  just  as  well,  and  in  excessive  quantity.  Fresh  sup- 
plies and  medicines  are  ordered  in  long  before  the  old  are  used  up  or 
exhausted.  And  lastly,  when  the  workman  is  discharged  as  cured,  the 
clinic  has  its  own  legal  bureau  run  by  skilled  advocates  to  look  after 
the  collection  of  its  inflated  bill  and  charges  and  the  half-salary  due 
the  victim  of  the  accident  as  well.  No  wonder  therefore  that  employ- 
ers find  themselves  called  upon  to  pay  three  or  four  times  the  ordinary 
rate  for  cases  treated  in  these  private  clinics  and  that  frequently  the 
amount  of  the  doctor's  charges  exceeds  the  indemnity  coming  to  the 
injured  party. 

In  recent  years,  a  third  class  of  clinics  has  been  established  by  cer- 
tain trades  unions  or  labor  exchanges,  as  they  are  called  in  France. 
These  treat  not  only  members,  but  their  wives  and  children  as  well  at 
reduced  rates.  In  case  of  accidents,  members  are  expected  and  ordered 
to  go  to  these  union  clinics  for  treatment. 

Bad  Results  Apparent. 

The  bad  results  of  the  provision  in  the  French  Accident  Insurance 
law  granting  to  the  injured  workman  the  right  to  select  his  own  physi- 
cian are  thus  apparent.  The  individual  practitioner  does  not  benefit, 
for  he  finds  no  accident  cases  coming  to  him  for  treatment.  The  stand- 
ard of  medical  ethics  has  been  lowered — in  one  Medical  Congress  a  res- 
olution was  even  proposed  approving  of  a  doctor's  paying  a  stipend  to 
the  workman  who  presented  himself  for  treatment.  The  workmen  are 
demoralized,  for  they  have  been  taught  not  to  regard  an  injury  or  dis- 
ability as  a  misfortune,  but  as  a  means  of  making  something  out  of 
their  employers.  Hence  their  readiness  to  travel  even  a  distance  of 
fifty  miles  from  their  places  of  injury  to  the  clinic  that  holds  out  the 
most  inducements.  The  employers  and  insurance  companies  are  fleeced 
at  every  possible  turn,  and  a  heavy  burden  imposed  on  French  industry 
in  the  shape  of  increased  premium  rates. 

By  what  is  known  as  the  tariff  Dubief,  the  French  law  prescribes 
carefully  what  rates  can  be  charged  for  different  kinds  of  medicines 
and  treatment  by  pharmacists  and  physicians  engaged  directly  by  in- 
jured workmen.  No  fault  is  found  with  these  rates;  in  fact,  the  tariff 
for  medicines  was  increased  on  the  average  some  25  per  cent  on  July 

29 


1,  but  a  strong  protest  is  made  against  the  number  of  visits,  consulta- 
tions, dressings,  massage,  and  electrical  treatments,  etc.,  and  against 
the  excessive  quantity  of  medicines  and  drugs  supplied.  A  case  in 
point  arose  at  Uzes,  where  a  physician  gave  the  injured  party  89  mas- 
sages and  12  electrical  treatments,  and  at  the  same  time  put  in  a  bill 
for  101  special  examinations  where  apparently  three  or  four  would 
have  been  sufficient.  A  favorite  device  is  to  charge  varying  and  sep- 
arate rates  for  massage  of  different  parts  of  the  body,  although  treated 
at  one  and  the  same  time. 

In  the  matter  of  medicines  and  surgical  supplies,  physicians  do  not 
hesitate  to  order  the  most  expensive  articles,  and  in  entirely  unneces- 
sary quantities.  An  expensive  medicine  will  be  prescribed  instead  of  an 
equally  efficacious  low-priced  laxative  like  castor-oil.  Fresh  drugs 
are  ordered  in,  although  the  quantity  on  hand  is  by  no  means  exhausted. 
In  one  flagrant  case,  when  a  laborer  was  incapacitated  for  twenty  days 
with  an  injury  to  his  shoulder,  his  attending  physician  prescribed  5 
pounds  of  liniment,  13  litres  of  wine,  and  400  feet  of  flannel.  One 
apothecary  even  presented  a  bill  for  1,148  francs  for  remedies  furn- 
ished a  workman  who  had  merely  scratched  his  finger. 

Patients  have  even  been  detected  in  reselling  flannel  and  other 
articles  which  had  been  supplied  to  them  in  excessive  quantities.  Fre- 
quently an  employee  finds  a  physician  dishonest  or  complaisant  enough 
to  issue  to  him  a  certificate  of  disability  when  he  is  either  not  at  all 
incapacitated  or  finds  himself  perfectly  able  to  work  for  some  other 
employer.  The  furnishing  of  these  false  medical  certificates  is  unfor- 
tunately by  no  means  uncommon.  In  one  extreme  case,  twenty-eight 
certificates  out  of  thirty-one  were  found  to  have  been  improperly 
issued. 

Apothecaries  Follow  Example. 

'     v' :     : 

With  the  example  of  the  physicians  before  them,  the  chemists  and 
apothecaries  have  not  been  slow  to  charge  what  the  traffic  will  bear 
and  to  swell  their  costs  as  much  as  possible.  As  in  the  case  of  physi- 
cians' rates,  the  law  carefully  prescribes  what  an  apothecary's  charges 
must  be.  The  statute  is  circumvented,  however,  by  furnishing  supplies 
and  medicines  in  greater  quantity  than  called  for,  or  articles  that  are 
entirely  unnecessary.  In  one  particularly  striking  instance,  an  apothe- 
cary treated  a  workman  for  an  insignificant  injury  to  the  fourth  finger 
of  the  left  hand.  To  cure  this  light  hurt,  the  pharmacist  presented  a 
bill  for  1,148  francs — finaly  reduced  by  the  court  to  364  francs — 
charging  for  dozens  of  bandages,  whole  packages  of  cotton  wool,  square 
metres  of  oil-silk,  litres  of  oxygenized  water,  and  for  154  francs  worth 
of  quinquina  or  tonic  wine. 

To  such  an  extent  do  certain  physicians  and  apothecaries  swell  their 
charges,  that  frequently  they  receive  more  for  their  services  than  the 
sum  paid  as  compensation  to  the  victim  of  an  injury.  Below  are  cited 
a  few  instances: 

30 


Physi-  Physi- 

Amt.  paid  cian's  Amt.  paid  cian's 

No.  of  days    workman,  charge.  No.  of  days  workman,  charge. 

disabled.         Francs.     Francs.  disabled.        Francs.  Francs. 

43   85  124  54  135  165 

31   93  120  48  144  208 

34  93  130  70   162  183 

Except  in  cases  where  a  large  amount  is  involved,  employers  have 
learned  by  experience,  that  it  does  not  pay  them  to  contest  a  physician's 
bill,  even  though  it  be  full  of  over-charges.  To  obtain  a  revision  of  a 
doctor's  account  requires  the  starting  of  not  inexpensive  court  proceed- 
ings, and  means  the  calling  in  of  outside  experts.  The  fees  of  these 
and  all  court  costs  must  be  paid  by  the  employer,  whether  he  wins  or 
loses,  and  frequently  these  equal,  or  even  exceed,  the  amount  of  the  re- 
duction obtained.  Thus,  in  one  case,  the  judge  cut  a  physician's  bill 
from  1,027  to  420  francs,  but  legal  costs  borne  by  the  employer  were 
500  francs,  so  that  the  net  amount  saved  was  only  107  francs.  The 
masters  find  it  less  expensive,  therefore,  to  submit  to  over-charging  in 
minor  accident  cases,  than  to  make  a  contest. 

While  the  courts  have  ruled  from  the  start  that  the  workman  had 
the  right  of  selecting  his  own  physician,  the  law  as  originally  passed  in 
1898  read  somewhat  obscurely  on  this  point.  Consequently  a  number 
of  the  large  industrial  establishments  insisted,  under  threats  of  dis- 
missal or  otherwise,  that  their  employees  when  injured  should  be 
treated  by  physicians  appointed  by  the  managers.  The  medical  pro- 
fession was,  of  course,  violently  opposed  to  this  practice,  and  finally 
succeeded  in  1905  in  having  this  sort  of  pressure  expressly  forbidden. 
At  the  same  time,  the  accident  insurance  law  was  amended  and  the 
laborer's  right  to  select  his  own  physician  and  pharmacist  stated  in 
clear  and  unequivocal  language.  This  curtailment  of  the  power  of 
employers  to  control  the  appointment  of  the  physician  was  immediately 
followed  by  a  remarkable  and  wholly  unlooked-for  increase,  both 
actually  and  relatively,  in  the  number  of  minor  accidents  involving 
temporary  disability. 

Previous  to  this  restrictive  legislation  of  1905,  the  number  of  lesser 
accidents  showed  no  change,  remaining  slightly  under  60  per  1,000 
workmen.  After  1905,  however,  a  striking  rise  is  to  be  noted,  attaining 
in  1909  the  figures  of  80.32,  a  gain  of  one-third  in  the  relative  number 
of  accidents  in  four  years.  These  figures  certainly  bear  out  the  con- 
tention of  the  employers  that  the  physicians  are  encouraging  the  work- 
men to  simulate  or  magnify  the  number  of  unimportant  accidents. 

Increased  Medical  Expenses. 

Again,  another  result  of  the  legislation  of  1905  has  been  greatly  to 
increase  the  cost  of  medical  expenses.  It  is  to  be  noted  that  up  to 
1904,  the  cost  figures  remain  about  the  same.  Beginning  with  1905, 
when  the  law  was  altered,  medical  costs  immediately  began  to  rise  in- 
stead of  being  stationary  as  heretofore.  In  1910,  they  were  actually 

31 


two  and  one-half  times  as  great  as  in  1904,  and  50  per  cent  higher  rela- 
tively per  100  francs  of  wages  insured. 

Once  more  we  observe  that  up  to  1904,  the  figures  for  losses  do 
not  vary  appreciably.  Nineteen  hundred  and  five  shows  the  first  im- 
portant gain,  and  every  following  year  marks  a  further  increase,  until 
in  1910  they  have  more  than  doubled  as  compared  with  1904. 

In  the  case  of  the  Mutual  Aid  Societies,  physicians  attending  mem- 
bers are  paid  annually  a  fixed  amount  per  head,  according  to  the  mem- 
bership of  the  various  societies.  The  system  has  never  been  followed 
of  paying  by  the  number  of  visits,  which  has  been  adopted  in  accident 
insurance  cases  and  which  is  a  direct  incentive  for  physicians  to  make 
unnecessary  visits  and  to  swell  the  amount  of  their  charges  as  much 
as  possible. 

The  courts  are  doing  what  they  can  to  check  this  fraudulent  over- 
charging by  physicians.  They  are  beginning  to  follow  the  rule  that 
where  a  bill  is  shown  to  be  excessive  the  losing  party  must  pay  the 
costs.  If  drugs  and  medical  supplies  are  ordered  in  too  great  quantities, 
the  employer  has  the  right  to  sue  the  physician  on  whose  prescription 
the  supplies  were  ordered  for  the  excess.  Articles  not  mentioned  in 
the  regular  tariff,  such  as  wine  or  mineral  waters,  cannot  be  charged 
for  nor  the  bottles  in  which  salves  or  liniments  are  contained.  These 
decisions  are  all  in  the  right  direction. 

On  every  ground,  therefore,  the  right  of  the  employee  to  choose  his 
own  medical  adviser  and  pharmacist  should  be  done  away  with.  It  is 
against  the  interests  of  both  employers  and  workmen,  and  has  given 
rise  to  many  dishonest  practices  on  the  part  of  physicians  and  apothe- 
caries which  mulct  the  employers  and  do  not  benefit  the  laborers.  The 
former  are  called  upon  to  pay  for  unnecessary  medical  visits  and  for 
excessive  quantities  of  medicines  and  drugs,  while  the  latter  suffer  in 
not  being  promptly  cured  and  in  having  the  time  of  their  enforced  idle- 
ness extended. 

While  the  desirability  of  this  legislation  would  seem  to  be  apparent 
to  all,  the  French  Parliament  has  thus  far  been  unwilling  to  act  in  the 
matter,  although  the  agitation  for  the  repeal  of  this  portion  of  the  law 
has  been  going  on  for  some  time.  In  default  of  this  relief,  the  em- 
ployers are  urging  the  abolition  of  the  tariff  Dubief  and  the  substitu- 
tion therefor  of  a  maximum  or  tariff  of  forfeitures,  based  on  the 
principle  now  in  force  in  Belgium  and  other  countries.  That  is  for  the 
various  classes  of  accidents,  the  compensation  of  the  physicians  shall 
not  exceed  a  given  amount.  It  is  thought  that  such  a  tariff  would  do 
away  with  the  opportunity  contained  in  the  present  law  of  making  over- 
charges in,  the  matter  of  visits  and  treatments.  A  suggestion  has  also 
been  made  that  a  part  of  the  physician's  and  pharmacist's  charges  should 
be  paid  by  the  injured  workman  himself,  who  would  thus  have  a  direct 
interest  in  seeing  that  the  number  of  dressings  and  visits  and  thie 
quantity  of  drugs  used  should  not  exceed  a  proper  amount.  These  two 
propositions  have  not  yet  been  worked  out  in  a  concrete  shape,  how- 
ever, and  it  is  therefore  futile  to  discuss  the  chances  of  their  adoption. 

32 


SICKNESS  INSURANCE  IN   FRANCE. 


Voluntary  Mutual  Associations. — Government  Subsidies. — Recent   Prog- 
ress and  Growing  Importance. — Defects. 


While  France  has  introduced  the  compulsory  insurance  of  working- 
men  against  accidents  and  old  age  disabilities,  insurance  against  sick- 
ness is  entirely  voluntary  with  the  workers.  This  large  and  important 
field  of  workingmen's  insurance  has  been  left  to  the  mutual  sickness 
insurance  societies.  Subventioned  by  the  Government  on  a  more  liberal 
scale  in  1898,  since  then  their  number  and  membership  has  increased 
rapidly.  Official  statistics  are  now  available  of  their  operations  up  to 
the  end  of  1908,  and  a  review  of  their  advancement  in  the  ten  years 
preceding  shows  some  very  interesting  and  noteworthy  results. 

The  societies  are  divided  into  two  classes,  approved  and  free,  which 
correspond  to  the  registered  and  unregistered  friendly  societies  in  Eng- 
land. A  distinction  is  made  in  the  approved  societies  between  those  for 
adults  and  those  for  school-children  or  scholastic  societies. 

The  following  table  shows  how  the  various  kinds  of  societies  have 
gained  in  number  since  1898: 

1898.          1903.          1908. 

Approved  adult    societies 8,391         11,078        14,932 

Approved   scholastic   societies 181          1,997          2,310 

Free  societies   3,253          3,203          3,243 

Total,  all  societies  11,825        16,278        20,485 

In  contrast  to  the  remarkable  growth  of  the  scholastic  societies, 
which  are  eleven  times  as  numerous  as  ten  years  ago,  is  to  be  noted 
the  stationary  number  of  the  free  societies.  These  do  not  receive  a 
Government  subvention,  and  the  limited  number  of  new  ones  formed 
do  not  suffice  to  make  up  for  those  changing  to  approved  societies  or 
going  out  of  existence.  In  1908  their  number  diminished  by  27  and 
they  are  likely  to  decrease  in  number  even  more  rapidly  hereafter. 

Of  the  20,485  societies  existing  at  the  end  of  1908,  statistics  were 
only  furnished  by  14,346  adult,  2,049  scholastic  and  2,958  free  societies, 
or  19,353  in  all.  As  to  the  relief  afforded,  the  approved  adult  and  free 
societies  divide  themselves  into  the  following  four  classes: 

Approved     Free 

Nature  of  relief.                                 Societies.  Societies.  Total  No. 

Sickness  insurance    5,737           2,307  8,044 

Sickness  and  old  age  benefits 7,609             319  7,928 

Old  age  benefits 495                75  570 

Other  objects   505             257  762 

Totals    14,346          2,958         17,304 

33 


Thus  92%  of  all  the  societies  insure  against  sickness  and  45% 
against  old  age  disabilities.  The  free  societies  devote  themselves 
mainly  to  sickness  insurance  and  have  paid  little  attention  to  the  sub- 
ject of  old  age  pensions. 

The  growth  of  membership  appears  as  follows: 


Societies  approved 

(adults).  1898. 

Active    members    1,279,358 

Honorary    members    244,632 


Totals    1,523,980 

Societies  approved 
(scholastic.) 

Active    members     57,829 

Honorary   members    4,738 


1903.  1908. 

1,770,772  3,103,635 

313,455  410,968 

2,084,227  3,514,603 


Totals     62,567 

Free  societies. 

Active    members    351,544 

Honorary   members    33,935 


Totals     385,479 


563,047 
46,665 

609,712 

403,678 
36,224 

439,902 


736,161 
47,620 

783,781 

359,289 
36,335 

395,624 


Total,   all   societies    1,972,026        3,133,843         4,694,008 

Of  the  4,235,785  active  members  in  1908,  2,691,780  were  men,  551,140 
women  and  992,865  children.  Of  the  children  736,161  were  enrolled  in 
the  scholastic  societies  and  256,704  insured  along  with  their  parents  in 
the  free  and  the  approved  societies.  All  told,  940,560  persons  were 
members  of  societies  insuring  against  sickness  alone,  1,300,741  mem- 
bers of  those  granting  old  age  pensions,  and  1,036,266  members  of  so- 
cieties granting  both  forms  of  relief.  The  growth  in  the  membership 
of  the  approved  adult  societies  has  been  very  rapid  in  the  last  few 
years.  Between  1903  and  1908,  they  gained  1,332,863  active  members, 
as  compared  with  1,281,766 — their  total  accession  in  the  33  years  im- 
mediately preceding — from  1871  to  1903. 

The  growth  in  income  is  shown  in  the  following  table: 

Approved  Adult  Societies. 

1898.  1903.  1908. 

Premium.                                        Francs.  Francs.  Francs. 

Active    members    17,890,204  23,997,813  36,735,850 

Honorary  members    2,568,449  3,306,106  4,333,240 

Subventions,  gifts  and  legacies   .     2,253,217  2,938,841  3,435,799 

Other   receipts    2,594,269  4,429,077  7,363,759 

Interest       3,670,175  5,868,725  12,399,544 

64,268,192 


Totals     28,977,014         40,540,562 


34 


Approved  Scholastic  Societies. 

Premiums  active   members    2,549,304  3,610,187 

Premiums  honorary  members 134,700  109,517 

Subventions,  gifts  and  legacies 205,209  178,741 

Other    receipts    131,494  184,375 

Interest       101,930  217,694 

Totals       3,122,637          4,300,514 

Free  Societies. 

Premiums  active  members   5,222,335  5,552,786  6,562,588 

Premiums  honorary  members    . . .  389,374  457,418  514,318 

Subventions,  gifts  and  legacies   . .  1,302,760  1,542,394  1,370,358 

Other    receipts    921,365  2,019,678  1,056,339 

Interest    1,460,402  1,529,739  1,512,086 

Totals      9,296,236         11,102,015         11,015,989 

The   expenses   in   1908  were  reported   as  follows: 

r- Approved  Societies— >>            Free 

Adult.  Scholastic.         societies. 

Expenses      49,586,850  3,733,487           7,752,170 

Surplus    income    14,681,324  567,027           3,263,819 

Available    resources    . .  262,848,360  6,548,968  47,731,630 

Pension  funds    222,400,243  7,819,219 


Totals    485,248,603         14,368,186 

All  the  societies  combined  thus  show  available  resources  of  547,- 
348,419  francs. 

Passing  now  to  the  number  of  beneficiaries  and  the  nature  of  the 
relief  afforded  by  the  various  societies  in  1908,  the  following  figures 
are  of  interest: 


—Approved  Societies— •>     Free 
Adult.        Scholastic,    societies.        Total. 


Sick    560,884 

Pensioners     177,380 

Funeral    benefits    . .     22,692 
Widows  and  orphans     21,301 

Aged   7,461 

Confirmed    invalids          4,420 

Total,  all  societies 


83,721 
195 


96,864 
8,811 
2,979 
2,112 
1,106 
588 


741,469 

186,191 

25,866 

23,4ia 

8,56T 

5,008 

990,514 


35 


r—  Approved  Societies- 
Adult.            Scholastic. 
8,048,454         1,990,860 

Daily  sick  benefit  (francs) 

1  34                  0  462 

Sick  benefit  per  member  (francs)  . 
Cost  medical  attendance   (francs)  .  . 
Cost  medicines    (francs)    

29.66                11.44 
5,190,780.             10,819 
5,916,092                8,954 

Sick  benefits  paid  in  cash  (francs) 
Funeral    benefits    

10,789,995            921,421 
1,558,590                4,040 

Widows  and  orphans    

1,815,474           

Aged      

375,198 

Chronic    invalids    

232,485           

Pensions  and  saving  funds  (francs) 

13,758,455         2,374,230 

Free 

societies. 

1,549,404 

1.56 
31.87 
630,775 
848,013 
2,419,978 
196,460 
906,026 
96,713 
45,040 
1,348,975 

Thus  the  total  monetary  relief  afforded  in  one  shape  or  another  was 
not  far  from  thirty-six  million  francs.  The  average  retiring  pension 
obtained  in  the  approved  adult  societies  varied  from  75  to  80  francs. 
For  the  free  societies,  the  corresponding  figure  was  153  francs.  The 
management  expenses  of  the  approved  adult  societies  were  2,531,083 
francs  or  5.1  per  cent  of  all  expenditures;  of  the  scholastic  195,629  or 
5.23  per  cent  and  of  the  free  societies  333,729  or  4.32  per  cent. 

As  to  the  subventions  granted  to  the  societies  by  the  State  in  one 
form  or  another,  the  same  reached  the  total  of  10,287,465  francs  in  1908. 
Of  this  amount  8,996,705  francs  came  from  the  central  government; 
920,536  from  the  various  communes  and  370,224  from  the  different  de- 
partments. The  approved  societies  alone  benefited  by  these  subven- 
tions, with  the  exception  of  50,604  francs  granted  by  certain  depart- 
ments and  communes  to  the  free  societies. 

One  notable  feature  of  the  mutual  sickness  insurance  societies  is 
their  small  average  membership — 134  and  216  active  members  in  1908 
for  the  free  and  approved  adult  societies  respectively.  In  this  re- 
spect they  lag  behind  the  sickness  societies  in  Germany  and  Austria, 
where  the  average  number  of  members  is  500  and  1,000.  But  while 
there  is  a  steady  increase  in  the  cost  on  account  of  sickness  in  Germany, 
where  the  insurance  is  compulsory  and  overseen  by  the  State,  the  op- 
posite tendency  prevails  in  the  French  mutual  societies.  The  following 
table  shows  this: 

Cases  of  Sickness  Per  100  Insured. 

1898.  1903.  1908.  1910. 

Approved  adult  societies 33.28  29.25  23.08  20.99 

Free    societies    33.60  27.79  25.22  18.33 

German  societies    35.  37.  43.2  43.3* 

Days  of  Sickness  Per  Case. 

Approved  adult  societies    21.39  22.30  22.57  21.96 

Free  societies    18.55  21.41  20.49  18.33 

German   societies    17.6  19.  19.63  19.7* 

*For  1911. 


36 


Days  of  Sickness  Per  Year  Per  100  Insured. 

Approved  adult  societies 712  652  521  4(51 

Free  societies    623  595  517  387 

German   societies    616  701  848  853* 

According  to  the  above  figures,  there  are  now  90  per  cent  more 
days  of  sickness  among  every  100  workmen  insured  in  Germany  than 
among  the  members  of  the  French  mutual  sickness  societies.  Among 
the  latter,  too,  the  cases  of  sickness  per  100  insured  are  one-third 
less  than  ten  years  ago,  while  among  the  Germans  they  are  one- 
third  greater.  To  account  for  this  difference  and  for  the  opposite 
tendencies  prevailing  in  the  two  countries  is  difficult.  Germany  is  be- 
coming more  and  more  an  industrial  nation,  where  the  conditions  of 
life  are  more  strenuous,  while  France  still  remains  largely  a  country 
of  small  landowners  and  shopkeepers.  Doubtless,  too,  the  French  mutual 
societies  with  their  smaller  membership  are  able  to  exercise  a  better 
control  over  their  members  than  is  the  case  with  the  German  sickness 
societies. 

It  should  be  further  noted  that  in  Germany  the  average  annual  con- 
tribution per  member  increased  in  the  period  1892-1907  from  $4.14  to 
$6.19  or  50  per  cent.  In  France  the  contribution  from  active  members 
is  much  lower  and  shows  rather  a  declining  tendency.  For  the  adult 
approved  societies,  it  fell  from  $2.89  in  1898  to  $2.60  and  $2.36  in  1903 
and  1908,  respectively.  Benefits  per  member  have  remained  about 
the  same  in  France,  while  in  Germany  they  have  shown  a  marked  rise 
coincident  with  the  increase  in  the  amount  of  sickness  and  in  the  sum 
total  of  contributions. 

Although  the  mutual  sickness  societies  in  France  have  made  such 
great  strides  in  numbers  and  adherents  since  1898,  they  are  as  yet 
largely  confined  to  the  more  important  centres  of  population.  Instead 
of  a  network  of  societies  covering  the  whole  country,  the  larger  part  of 
the  rural  districts  possess  none.  Thus  in  1908  out  of  the  36,222  com- 
munes in  France,  societies  were  only  to  be  found  in  8,548  or  24  per  cent. 
424  out  of  2,911  cantons,  or  15  per  cent  were  likewise  without  any 
societies.  There  is  therefore  a  large  extent  of  territory  to  which  the 
operations  of  the  societies  could  be  extended.  Again  the  societies  are 
weak  in  the  number  of  women  members.  In  1908  women  comprised 
but  551,105  out  of  a  total  active  membership  in  the  free  and  approved 
adult  societies  of  3,462,924,  or  15  per  cent,  as  against  35  per  cent  in  the 
German  sickness  societies. 

French  mutual  societies  have  thus  by  no  means  reached  the  limit 
of  possible  growth.  Indeed  if  sickness  insurance  among  workmen  in 
France  were  as  widespread  as  in  Germany,  their  active  membership 
should  exceed  eight  millions  or  almost  double  the  number  reported  at 
the  end  of  1908.  That  their  membership  is  still  increasing  rapidly  ap- 

*For  1911. 

37 


pears  from  the  statement  recently  published  in  the  daily  press  that  their 
total  number  of  adherents  to-day  of  all  classes  is  six  millions  as 
against  4,694,000  on  December  31st,  1908.  A  contributing  cause  to  this 
growth  is  the  provision  in  the  new  law  making  insurance  against  old 
age  disabilities  compulsory,  by  which  the  State  assumes  one-sixth  of  a 
workman's  contribution  for  such  insurance  provided  he  can  show  that 
he  is  insured  against  sickness  in  a  mutual  society  and  is  paying  6 
francs  a  year  as  premium  therefor. 


OLD  AGE  PENSION  LEGISLATION  IN  FRANCE. 
Reasons  for  Its  Non-Success  and  Unpopularity. 


No  sooner  had  the  French  legislature  in  1898  passed  the  law  pro- 
viding for  the  compulsory  insurance  of  workingmen  against  accidents 
than  the  question  of  providing  old  age  pensions  for  laborers  began  to  be 
agitated.  It  was  generally  admitted  that  something  should  be  done  in 
that  direction,  but  public  opinion  was  divided  as  to  the  best  method  to 
be  followed.  The  choice  lay  between  a  system  of  compulsory  insurance 
such  as  enforced  in  Germany,  or  the  plan  of  teaching  and  helping 
workmen  to  insure  themselves  by  making  use  of  and  encouraging  the 
establishment  of  voluntary  associations  like  the  Mutual  Aid  Societies. 
Although  the  result  of  a  canvas  made  in  1903  showed  that  an  over- 
whelming majority  of  the  Chambers  of  Commerce  and  of  the  various 
labor  organizations  were  opposed  to  any  form  of  compulsory  insurance, 
the  French  lawmakers  decided  to  adopt  the  German  system.  Even  if 
opposed  by  public  sentiment,  they  concluded  that  compulsory  insur- 
ance was  the  only  means  by  which  the  careless  or  improvident  workman 
could  be  made  to  help  provide  for  himself  a  pension  against  old  age 
disabilities.  Voluntary  state  aided  insurance,  they  believed,  would  not 
accomplish  sufficient  in  this  direction  to  make  its  adoption  desirable. 

Without  attempting  a  minute  description,  it  suffices  to  say  that 
the  French  law  provides  for  the  compulsory  insurance  of  all  salaried 
employees  who  earn  less  than  3,000  francs,  or  $600,  a  year.  Instead 
of  a  sliding  scale,  based  on  a  division  into  wage  classes  as  in  Germany, 
all  workers,  regardless  of  the  wages  earned,  pay  the  same  fixed  amount, 
namely,  nine,  six  and  four  and  a  half  francs  each  year  for  men,  women 
and  children,  respectively.  The  employer  has  to  contribute  an  amount 
equal  to  that  paid  by  his  employee.  When  the  retiring  age  limit  of  60 
years  has  been  reached  (in  Germany  and  England  the  limit  is  70  years), 
the  French  Government  adds  100  francs  or  $20  each  year  to  every 
individual  pension.  This  amount  is  increased  10  per  cent  whenever  the 
insured  can  show  that  three  of  his  children  survived  at  the  age  of  six- 
teen years.  In  normal  cases  the  workman  must  make  30  annual  pay- 
ments before  he  becomes  entitled  to  a  pension.  Each  year  of  military 
service  for  the  man  and  every  child  borne  by  a  woman  counts  as  a 
year  of  payment. 

For  employees  earning  from  3,000  to  5,000  francs  a  year  and  for 
tenants,  small  farmers  and  shopkeepers  without  fixed  salaries,  volun- 
tary insurance  is  permissible,  with  nine  francs  annually  as  the  mini- 
mum and  eighteen  as  the  maximum  payment.  A  bonus  equal  to  one- 
half  of  the  insured's  payment  is  added  by  the  Government  each  year, 
but  in  no  case  more  than  sufficient  to  increase  the  retiring  pension  by 
100  francs  a  year.  If  desired,  both  compulsory  and  voluntarily  in- 
sured workmen  can  let  their  pensions  accumulate  until  they  have 
reached  the  age  of  65  years,  in  which  event  the  retiring  pension  is 
very  much  higher  than  at  60  years — in  some  cases  two-thirds.  While 

39 


in  Germany  the  maximum  pension  at  70  years  has  been  $58  and  the 
average  pension  but  $41,  the  highest  possible  pension  in  France  at  65 
years  is  $110.  No  statistics  are  yet  available  as  to  what  is  the  average 
pension  in  France. 

At  the  time  the  French  law  was  enacted,  the  assertion  was  made 
that  out  of  the  22  million  adult  population,  12  millions  would  be  en- 
rolled as  compulsorily  insured  and  that  the  adhesion  of  six  million  more 
voluntarily  insured  workers  might  be  expected.  Just  as  in  Germany, 
where  11^  million  workmen  were  enrolled  the  first  year  after  a  simi- 
lar statute  was  passed,  the  supporters  of  the  French  act  expected  an  as 
equally  prompt  and  universal  enlistment  on  the  part  of  the  French 
laborers.  The  contrary,  however,  has  proved  to  be  the  case.  In  place 
of  25  million  dollars  realized  from  the  contributions  of  employers 
and  employees  during  the  first  year  of  the  operation  of  the  German 
law,  the  corresponding  receipts  during  the  first  twelve  months  of  the 
French  act  were  only  $5,700,000.  The  French  law  took  effect  on  July 
3rd,  1911,  and  is  therefore  now  in  its  second  year.  The  receipts  for  that 
year  are  running  higher  than  for  the  first  and  at  the  rate  of  fifty 
million  francs,  or  ten  million  dollars  a  year.  This  means,  if  14  francs 
be  taken  as  the  average  individual  contribution,  that  only  about  three 
and  one-half  million  laborers  have  been  brought  under  the  provisions 
of  the  law,  or  only  about  one  person  in  ten.  Contrast  this  with  the 
showing  in  Germany,  where  one  person  out  of  every  four  is  insured 
against  old  age  disabilities.  The  government  claims  an  enrollment  of 
almost  eight  millions,  including  about  800,000  voluntarily  insured  work- 
men; but  its  figures  are  thoroughly  distrusted  and  are  not  borne  out 
by  the  published  table  of  receipts  of  contributions.  These  have  been 
practically  stationary  for  the  last  six  months,  and  according  to  the 
Government's  own  figures,  the  number  of  employees  insured  has  in- 
creased only  two  per  cent  during  the  last  quarter.  In  other  words, 
the  law  is  not  making  headway,  and  the  French  working  classes  are 
persistently  refusing  to  accept  its  benefits.  As  an  evidence  of  this 
may  be  cited  the  experience  of  a  group  of  landowners  who  offered  to 
pay  out  of  their  own  pockets  the  contributions  required  of  their  agri- 
cultural laborers,  thus  securing  to  the  latter  the  benefits  of  the  law 
free  of  charge.  To  their  astonishment,  the  laborers  one  and  all  de- 
clined to  become  insured  even  on  those  terms.  That  the  authorities 
are  thoroughly  dissatisfied  with  the  results  thus  far  obtained  is  evi- 
denced by  the  Government's  proposal  to  amend  the  law  so  as  to  compel 
all  employers  to  report  what  employees  are  not  obeying  its  provisions 
and  to  deduct  from  every  salary  the  amount  of  the  workman's  contri- 
bution, irrespective  of  his  consent. 

Why  is  it  that  the  French  working  population  are  so  unwilling  and 
reluctant  to  accept  the  benefits  of  this  legislation,  while  in  Germany  a 
similar  statute  has  met  with  universal  and  prompt  acceptance?  The 
answer  to  this  question  is  to  be  found  in  the  failure  of  the  French 
legislators  to  adopt  a  system  of  old  age  insurance  suited  to  the  habits 
and  mental  attitude  of  their  people.  The  idea  of  old  age  pensions  is 

40 


not  repugnant  to  the  French  workman,  but  the  Prussian  bureaucratic 
way  of  providing  for  it  does  not  appeal  to  him.  Not  the  principle,  but 
the  method,  is  what  he  objects  to.  Insurance  against  old  age  disabilities 
is  nothing  more  than  a  system  of  enforced  saving  by  which  the  laborer 
is  compelled  to  set  aside  or  contribute  part  of  his  earnings  so  that  he 
will  not  be  without  resources  when  his  strength  begins  to  decline  and 
he  can  no  longer  find  work.  But  in  France  thrift  does  not  have  to 
be  taught,  it  is  practised  by  all  classes  and  from  the  earliest  years. 
Little  school  children  are  enrolled  in  mutual  aid  societies  to  which 
they  contribute  two  cents  a  week.  There  are  over  2,300  such  societies 
for  public  school  children,  with  a  membership  of  818,000  pupils.  When 
the  children  leave  school  their  deposits  are  returned  to  them  and  the 
opening  of  a  savings  account  through  the  post  office  is  made  possible. 
The  first  step  towards  the  securing  of  a  retiring  pension  has  thus  been 
taken.  Generally,  however,  a  pension  or  annuity  is  not  the  object 
saved  for,  but  rather  the  acquisition  in  time  of  a  small  plot  of  land  or 
of  a  little  shop.  In  other  words,  the  French  laborer  aims  to  be  inde- 
pendent and  to  be  able  to  invest  his  savings  as  he  deems  best.  This 
ingrained  desire  for  liberty  of  action  on  the  part  of  the  race  was 
lost  sight  of  by  the  French  legislators  when  they  decided  to  follow  the 
German  system  of  old  age  pensions  for  workmen.  The  German  people 
are  accustomed  to  a  minute  Government  supervision  of  their  method 
of  living  and  of  their  private  affairs  and  to  implicitly  obey  official 
regulations.  To  the  Frenchman,  however,  the  complicated  formalities 
and  the  involved  workings  of  the  German  plan,  where  the  individual  has 
no  control  over  the  disposition  of  his  own  savings,  are  extremely  dis- 
tasteful. Nor  do  the  French  seem  to  possess  a  sufficiently  expert  body 
of  officials  capable  of  handling  efficiently  the  elaborate  governmental 
machinery  required.  The  payment  of  pensions  is  in  many  cases  six 
months  in  arrears,  and  complaints  are  universal  of  the  long  delays  in 
the  carrying  out  of  the  provisions  of  the  law.  Even  if  these  adminis- 
trative difficulties  be  overcome,  there  is  little  likelihood  of  the  statute 
ever  becoming  very  popular.  In  time,  by  amendments  the  present  mil- 
lions of  the  recalcitrant  workers  may  be  brought  into  line  and  compelled 
to  comply  with  the  law;  but  it  will  be  a  forced  and  unwilling  adhesion. 
Possibly,  too,  as  urged  by  many  prominent  men,  the  whole  system  may 
be  changed,  the  obligatory  features  modified  and  more  encouragement 
given  to  individual  initiative  and  to  private  organizations.  That  would 
be  the  more  desirable  method. 

The  lesson  to  be  derived  from  French  legislation  on  this  subject  is 
plain.  In  devising  a  new  law  to  cover  any  branch  of  workingmen's 
insurance,  the  greatest  care  should  be  taken  to  secure  the  adoption  of 
a  measure  that  will  conform  to  or  fit  in  with  the  habits  and  disposi- 
tions of  the  working  people.  Because  a  certain  system  has  produced 
satisfactory  results  and  run  smoothly  in  one  country  is  no  reason  why 
it  should  be  blindly  followed  in  another.  Only  when  a  law  complies 
with  public  sentiment  will  it  find  a  prompt  and  universal  acceptance, 
without  which  successful  operation  cannot  be  anticipated. 

41 


HOLLAND. 

WORKMEN'S  ACCIDENT  COMPENSATION. 


How  Insured. — Functions   Performed  by  the  State. — Extent  of  Abuses. 

Some  Defects. 

Under  the  Dutch  common  law,  an  employer  could  not  be  held  re- 
sponsible for  an  accident  to  an  employee  where  the  same  resulted  from 
an  act  of  God,  an  unknown  cause  or  through  the  laborer's  negligence. 
That,  of  course,  resulted  in  an  unsatisfactory  state  of  affairs,  which 
was  not  materially  helped  by  the  placing  of  employers'  liability  risks 
with  private  insurance  companies.  Those  insurers  paid  only  small 
sums  in  proportion  to  the  injuries  and  then  often  only  after  contests. 
Yet,  in  spite  of  the  example  set  by  Germany  almost  a  decade  before, 
compulsory  insurance  of  workingmen  against  accidents  did  not  come 
into  force  in  Holland,  until  February  1st,  1903. 

Originally  the  intention  was  apparently  to  follow  the  Austrian  law 
as  a  model.  The  idea  of  compelling  employers  to  group  themselves 
into  associations  for  accident  insurance  purposes  was,  however,  aban- 
doned on  the  plea  that  the  country  was  too  small  and  the  number  of 
employers  in  many  forms  of  industrial  pursuits  too  limited  to  make 
the  establishment  of  such  associations  desirable.  As  just  recently  in 
Switzerland,  a  bitter  struggle  took  place  between  the  advocates  and 
opponents  of  establishing  a  State  monopoly  of  this  form  of  insurance. 
In  the  lower  house,  where  the  labor  and  socialistic  element  was  most 
strongly  represented,  the  vote  was  overwhelmingly  in  favor  of  monopoly 
and  against  freedom  of  choice.  Owing,  however,  to  the  obstinate  re- 
sistance of  the  upper  chamber  the  monopoly  plan  was  finally  defeated 
and  free  competition  between  State  and  every  other  form  of  accident 
insurance  allowed.  This  outcome  has  proved  very  fortunate  for  the 
employers,  as  State  insurance  has  turned  out  to  be  the  most  costly  of 
all. 

Underlying  the  Dutch  law  is  the  false  idea  that  this  form  of  enact- 
ment is  class  legislation,  in  which  the  interests  of  employers  and  em- 
ployees are  opposed.  Thence  the  theory  that  the  rights  of  the  victim 
of  an  accident  will  not  be  safeguarded  if  the  employer  has  any  say 
as  to  the  method  of  treatment.  For  this  reason  the  injured  workman 
is  given  the  right  of  selecting  his  own  physician  and  a  Government  of- 
ficial is  made  to  intervene  at  every  turn  between  the  employer  and  the 
workman.  The  State  alone,  through  its  own  medical  department,  de- 
termines the  extent  of  the  disability  incurred  and  the  compensation  to 
be  paid. 

Not  only  does  the  Government  fix,  but  it  also  pays  out  the  indem- 
nity awarded  to  the  victim,  in  weekly  installments.  No  contact  between 
employer  and  employee  after  an  accident  is,  therefore,  the  rule.  This 

42 


fact  should  be  borne  in  mind  before  proceeding  to  a  detailed  examina- 
tion of  the  workings  of  the  law. 

Leaving  for  later  discussion  the  question  of  how  the  various  sys- 
tems of  insurance  are  faring  in  this  open — but  not  on  an  equal  footing — 
competition,  the  first  thing  to  consider  is  the  number  of  workmen  af- 
fected by  and  of  injuries  reported  under  the  law.  This  is  shown  in  the 
following  table,  which  covers  only  serious  injuries  that  lasted  over  two 
days  and  for  which  an  indemnity  was  paid. 


No.                      No.            Under 

Over 

Year. 

workmen.       accidents.       6  weeks. 

6  weeks. 

Deaths. 

1903     .  . 

455,365           30,020           26,594 

3,176 

250 

1904     .  . 

508,356           39,136           34,495 

4,408 

233 

1905     .  . 

528,820           44,219           39,204 

4,782 

233 

1906    .  . 

557,992          51,337          45,631 

5,470 

236 

1907    .. 

574,472           54,458           48,304 

5,894 

260 

1908    .. 

586,427           49,799           44,463 

5,102 

234 

1909    .. 

605,450           48,377           43,514 

4,622 

241 

1910    .. 

631,307           48,782           43,825 

4,700 

257 

1911    .. 

650,000           52,741           47,552 

4,923 

266 

1912 

669,000            



Accidents  per         Under 

Over 

Year. 

1,000  workmen.     6  weeks.         6  weeks. 

Deaths. 

1903    .. 

65.9                58.4 

5.4 

0.54 

1904    .. 

77.                  67.9 

6.8 

0.46 

1905    .. 

83.6                74.1 

6.8 

0.45 

1906    .. 

92.                   81.7 

7.4 

0.44 

1907    .. 

94.8                 84. 

8.2 

0.48 

1908    .. 

84.9                 75.8 

6.8 

0.42 

1909    .. 

79.9                 71.9 

5.8 

0.41 

1910    .. 

77.5                 69.6 

5.6 

0.42 

1911 

81.2                 74. 

7.6 

0.41 

The 

following  figures  have  been  published  as  yet 

only  for  the  period 

1903-1910: 

Permanent       Per       Average     r--  

-Disability— 

N 

Year. 

disability       1,000     disability        25% 

25-       50- 

75- 

cases,     workmen,  per  cent,     or  less. 

50%.     75%. 

100%. 

1903     .  . 

657           1.54           45.01             33.2 

33.9       16.7 

16.2 

1904    .. 

890           1.89           43.46             35.7 

30.5       18.3 

15.5 

1905    .. 

1,152           2.24           39.09             41.3 

33.         13.3 

12.4 

1906    .. 

1,261           2.43           36.88             44.2 

32.3       14.4 

9.1 

1907    .. 

1,224           2.14           35.98             46.3 

31.1       14.9 

7.7 

1908    .. 

1,109           1.93           34.52             51.2 

29.1       12.3 

7.4 

1909    .. 

1,125           1.90           34.38             50.6 

30.9       12.1 

6.4 

1910    .  . 

1,071           1.84           32.19             57.5 

26.         10.0 

6.5 

In  1910,  the  average  premium  charged  by  the  state  insurance  de- 
partment or  bank  was  2.73%.  In  relation  to  wages,  losses  in  Holland 
and  Austria  since  1903  have  run  as  follows: 


Year. 
1903. 
1904. 
1905. 
1906. 


Austria 
, ..  1.91 
. ..  1.95 
...  1.95 
.  2.09 


Holland. 
1.54 
1.82 
1.91 
2.00 


Year. 
1907, 
1908, 
1909 
1910 


Austria. 

. .   1.95 

, ..   1.86 

. ..   1.57 

.   1.40 


Holland. 
1.92 
1.63 
1.54 
1.40 


The  following  is  the  rate  of  accidents  per  1,000  workmen  in  the  dif- 
ferent trade  groups  for  the  same  years: 


Group. 

I. 

II. 

III. 

IV. 

V. 

VI. 

VII. 

VIII. 

IX. 

X. 

XL 

XII. 

XIII. 

XIV. 

XV. 

XVI. 

XVII. 

XVIII. 


1903. 

Pottery,  glass,  lime,  etc 64.9 

Precious    stones 17.5 

Printing  and  lithographing . . .   19.4 

Building  and  engineering 89.4 

Chemicals  and  explosives  ....  ,40.1 

Wood,  cork  and  straw 61.8 

Clothing  and  cleaning 20.3 

Fine  arts   23.6 

Leather,  rubber,  etc 30.3 

Minerals,  coal,  etc 61.4 

Metals     78.1 

Machinery,  etc 116.3 

Ships   and  vehicles 117.3 

Paper  products,  etc 44.4 

Textiles    21. 

Gas  and  electricity  57.8 

Food  products    47.7 

Trade  and  transportation   ...   71.9 


1905. 

1907. 

1909. 

1910. 

90.2 

113. 

96.38 

98.88 

13. 

17.6 

14.48 

15.04 

28.4 

31.5 

30.97 

28.25 

112.2 

119.3 

102.60 

99.38 

52.5 

62. 

51.44 

57.98 

85.9 

100.1 

90.30 

88.63 

21. 

25.8 

24.33 

23.74 

56.8 

49.2 

30. 

23.20 

48.3 

55. 

50.81 

49.12 

96.3 

118.8 

147.49 

170.82 

115.6 

129.6 

112.21 

107.72 

134.1 

152.9 

132.89 

126.67 

153.7 

198.3 

165.08 

138.46 

51.4 

64.8 

61.68 

56.50 

26.7 

34.9 

27.07 

27.44 

65.7 

75.1 

53.37 

54.40 

62.4 

70.6 

63.18 

61.75 

87.9 

95. 

71.90 

69.43 

65.9       83.5       94.8       79.94       77.52 


As  in  almost  all  other  countries  the  percentage  of  cases  involving 
death  or  permanent  disability  remains  about  the  same.  Whatever  in- 
crease has  occurred  has  taken  place  in  the  minor  accidents  entailing 
a  disability  of  less  than  six  weeks'  duration. 

It  is  to  be  noted  that  up  to  1907,  accidents  increased  both  in  total 
and  in  relative  number.  Since  that  date,  however,  there  has  been  quite 
a  decline  in  both  respects,  due  largely  to  a  stricter  control  exercised 
by  the  Government  officials.  In  this  regard,  Holland  is  having  a  hap- 
pier experience  than  France,  where  accidents  show  an  almost  uninter- 
rupted gain  from  year  to  year.  This  difference  is  all  the  more  striking 
because  some  false  rules  are  followed  in  the  interpretation  and  adminis- 
tration of  the  Dutch  law,  which  afford  opportunities  for  abusive  prac- 
tices. 

In  the  first  place,  the   Government  physicians   who,  in   every  in- 


44 


stance,  determine  the  extent  of  the  injuries  received  by  the  victim  of  an 
accident,  base  their  appraisal  on  the  theoretical  impairment  suffered 
and  not  on  the  actual  loss  in  wages  incurred.  For  example,  if  a  laborer 
loses  an  eye,  he  is  deemed  to  be  30  per  cent  less  efficient  than  before 
and  receives  an  annuity  accordingly.  Yet  his  work  may  have  been  of 
a  comparatively  simple  nature,  which  he  is  able  to  perform  just  as  well 
after  as  before  his  accident.  If  given  his  full  wages  again,  besides  the 
indemnity  awarded  him,  he  will  receive  much  higher  pay  than  an  able- 
bodied  workman  with  unimpaired  vision.  In  order  to  avoid  having 
workmen,  who  have  been  formerly  injured,  receive  more  than  the  pre- 
vailing rate  of  wages,  the  large  employers  exchange  lists  containing 
the  names  of  such  employees  as  are  known  to  be  in  receipt  of  weekly 
indemnities.  If  one  applies  for  work  he  will  not  be  taken  on  unless  he 
will  agree  to  a  reduction  in  the  amount  of  the  usual  weekly  wage  by 
the  sum  received  by  him  as  an  indemnity.  Consequently,  whenever  he 
can,  the  workman  tries  to  conceal  from  his  employer  the  fact  that  he  is 
drawing  a  regular  pension  on  account  of  an  injury  previously  incurred. 
If  he  succeeds,  his  salary  is  higher  than  that  of  the  ordinary  laborer 
doing  the  same  work,  while  if  he  fails  the  employer  reaps  the  benefit 
of  the  indemnity  through  not  having  to  pay  the  full  rate  of  wages.  In 
either  case,  someone  makes  a  profit  out  of  the  pension,  which,  of  course, 
is  wrong.  Atonement  for  an  actual  wage  loss  suffered  is  the  only  cor- 
rect rule  to  be  followed  in  settling  for  workingmen's  accidents.  Any 
other  method  is  a  direct  incentive  to  the  laborer  to  exaggerate  the  ex- 
tent of  his  injuries  as  much  as  possible. 

Indeed,  while  much  better  kept  in  check  than  in  some  other  coun- 
tries, exaggeration  and  simulation  of  accidents  by  workmen  are  not 
unknown  and  are  much  complained  of  by  employers,  especially  the 
former  evil.  In  general,  the  same  drawbacks  to  the  compulsory  work- 
men's accident  insurance  are  to  be  observed  in  Holland  as  elsewhere. 
A  hurt  that  would  not  ordinarily  cause  a  stoppage  of  work  in  a  com- 
pulsorily  insured  trade  results  in  a  cessation  of  labor,  and  an  injury  to 
an  insured  employee  takes  much  longer  to  heal  than  if  he  were  unin- 
sured. 

Another  incentive  to  prolonged  and  unnecessary  idleness  on  the  part 
of  those  injured  exists  in  Holland  through  workmen  obtaining  benefits 
from  outside  sources  in  addition  to  the  amount  alloted  to  them  by  the 
accident  insurance  law.  The  amount  is  fixed  at  70  per  cent  of  their 
usual  wage.  If,  in  addition,  they  receive  monetary  assistance  from 
a  fraternal  order,  their  total  income  frequently  becomes  greater  during 
the  period  of  disability  than  while  they  were  at  work.  In  one  instance, 
half  of  the  workmen  treated  were  receiving  from  90  to  150  per  cent 
of  their  usual  salaries.  Under  such  circumstances  laborers  will 
naturally  delay  resuming  work  as  long  as  they  can.  The  experience 
of  the  Dutch  nation  in  this  respect  emphasizes  the  necessity  of  not 
putting  the  scale  of  compensation  for  accidents  at  too  high  a  figure. 
The  injured  laborer  should  always  be  under  a  strong  pecuniary  in- 
centive to  resume  his  employment.  The  possibility  also  of  obtaining 

45 


benefits  in  excess  of  the  usual  wage  through  carrying  outside  insur- 
ance should  be  strictly  guarded  against  and  forbidden,  as  in  the  re- 
cently adopted  Swiss  law. 

Although  injured  workmen  have  the  right  of  selecting  the  physicians 
who  shall  treat  them,  the  grave  abuses  that  have  resulted  elsewhere 
from  the  adoption  of  this  system  are  hardly  to  be  found  in  Holland. 
Medical  costs  per  accident  and  in  the  aggregate  have  remained  about 
the  same.  Various  reasons  account  for  this  difference  from  the  experi- 
ence of  France,  where  free  choice  by  the  laborer  of  his  medical  iat- 
tendant  also  prevails,  with  a  resultant  constantly  augmenting  burden 
of  expenditure.  In  the  first  place,  the  physician's  role  in  Holland  is 
limited  to  treating  the  injured  party.  He  has  nothing  to  say  as  to 
the  compensation  to  be  paid  the  victim,  which  is  fixed  by  a  Government 
official.  There  is  thus  no  opportunity  for  the  exploitation  of  the  em- 
ployer through  doctors  and  workmen  acting  in  collusion  and  making 
false  statements  as  to  injuries.  Secondly,  Holland  is  a  small  country, 
with  only  2,500  physicians  in  active  practice.  It  is  easy  therefore  for 
the  authorities  to  keep  tab  on  each  individual  practitioner  and  to  call 
him  sharply  to  account  if  his  treatment  of  accident  cases  is  unnecessarily 
prolonged  and  the  convalescence  of  his  patients  unusually  slow.  Besides, 
a  doctor  caught  in  improper  practices  may  have  his  license  to  treat 
accident  cases  revoked. 

A  third  and  important  deterrent  is  found  in  the  clause  of  the  Dutch 
accident  law,  which  permits  the  employer  to  prescribe  the  first  aid 
treatment  to  an  injured  employee.  How  important  the  provision  is  will 
appear  from  the  following  table: 

Total          No.  injuries  Total     No.  injuries 

accidents       cured  within  accidents  cured  with- 

Year.  reported.  2  days.  Year.  reported,     in  2  days. 

1903    38,706  8,686  1908    65,550  15,571 

1904   49,667  10,531  1909   64,404  16,027 

1905   55,497  11,272  1910   66,086  17,304 

1906   64,864  13,527  1911   71,731  18,990 

1907   68,994  14,536 

As  the  law  prescribes  that  no  indemnity  shall  be  paid  unless  the  dis- 
ability resulting  from  an  injury  exceeds  two  days,  the  figures  in  the 
second  column  give  the  number  of  accidents  reported  which  either  re- 
sulted in  no  harm  being  done  or  which  were  cured  in  two  days'  time 
through  the  use  of  simple  medical  surface  applications.  These  form 
one-quarter  of  all,  and  about  the  treatment  of  them  the  employer  has 
the  say  and  the  workman  has  practically  no  voice  in  the  selection  of 
the  physician.  This  is  a  very  valuable  privilege  for  the  employers 
and  checks  dishonest  practices,  as  the  following  illustration  will  show: 
In  some  of  the  larger  industrial  plants,  surgical  rooms  are  established 
with  a  company  doctor  frequent  in  attendance.  No  matter  how  trifling 
his  hurt  may  be,  a  workman  is  obliged,  under  penalty  of  instant  dis- 
missal, to  report  at  once  as  soon  as  he  suffers  an  injury  at  the  doctor's 
headquarters  for  treatment.  Suppose  something  has  flown  into  his 

46 


eye.  The  offending  particle  is  forthwith  removed,  and  the  physician 
can  tell  at  once  whether  the  patient  should  continue  work  or  not.  If 
the  injury  is  found  to  be  a  slight  one,  the  laborer  knows  that  it  will 
be  useless  for  him  to  attempt  to  magnify  it  into  an  excuse  for  not 
working,  even  though  he  can  find  an  easy-going  physician  willing  to 
substantiate  his  claim.  Not  only  does  the  prompt  first  aid  treatment 
furnished  by  the  employer  thus  prevent  any  exaggeration  or  simulation 
of  injuries,  but  it  also  greatly  lessens  the  chances  of  a  wound  leading 
to  a  prolonged  disability  through  neglect  or  lack  of  treatment  in  its 
early  stages. 

On  the  question  of  medical  treatment,  therefore,  the  experience  of 
Holland  cannot  be  cited  as  an  argument  in  favor  of  the  free  choice  of 
the  physician  by  the  workingmen.  If  abuses  have  been  kept  down,  it 
has  been  due  to  limiting  the  choice  in  part  and  to  other  favoring  cir- 
cumstances, like  the  strict  control  possible  in  a  small  country.  Black 
sheep  exist  among  the  members  of  the  medical  profession  in  all  the 
large  centres,  who  would  be  only  too  ready  to  mulct  the  employers  if 
the  opportunity  arose  through  aiding  injured  laborers  to  make  un- 
founded and  exaggerated  claims. 

Dissatisfaction  on  the  part  of  the  workingmen  with  the  amounts 
awarded  them,  so  prevalent  in  Germany,  hardly  exists  in  Holland. 
Appeals  to  the  courts  especially  established  to  pass  on  disputed  ques- 
tions arising  out  of  the  accident  insurance  law  are  comparatively  in- 
frequent. In  1911,  1,650  cases  were  decided  in  the  first  appeal  court  of 
which  only  1,284  related  to  questions  of  indemnity.  Mention  may  be 
made  here  that  the  Dutch  law  does  not  permit  the  settlement  of  small 
annuities  by  the  payment  of  a  lump  sum,  as  allowed  in  France.  But 
in  Holland,  instead  of  the  employer,  it  is  the  Government  office  which 
has  the  burden  of  making  these  small  regular  payments,  on  each  re- 
curring Tuesday,  amounting  in  some  cases  to  only  a  few  cents  a  week. 
That  requires  much  additional  bookkeeping  and  is  one  cause  why  the 
administrative  expenses  of  the  State  insurance  department  are  so  high. 

As  a  whole,  it  may  be  said  that,  while  the  law  has  some  serious  de- 
fects, workingmen's  accident  insurance  in  Holland  has  not  produced  the 
baneful  effects  to  be  found  elsewhere.  In  spite  of  the  increased  strain 
on  laborers  due  to  the  greater  industrial  activity  and  attendant  over- 
time working  during  the  last  few  years,  accidents  are  relatively  less  in 
number  than  in  1904.  Fraudulent  and  simulated  accidents  are  guarded 
against.  Collusive  practices  between  physicians  and  workmen  are  almost 
impossible  on  account  of  the  strict  control  and  settlement  of  claims  by 
Government  officials,  whose  probity  and  uprightness  are  very  high. 
Yet  one  must  admit  that  owing  to  certain  defects  inherent  in  every 
system  of  government  administration,  the  role  played  by  the  State  in 
Holland  has  very  considerably  increased  the  burden  on  industry  from 
workingmen's  accidents.  What  those  defects  are  and  how  they  tend  to 
unduly  raise  costs  can  be  most  clearly  brought  out  by  passing  to  an 
examination  of  State  as  contrasted  with  private  insurance  in  the  matter 
of  employers'  liability  risks. 

47 


DUTCH  EXPERIENCE  IN  STATE  VERSUS  PRIVATE  INSURANCE. 

Higher  Cost  and  Disadvantages  of  Former. — Disappearance  of  Self  In- 
surance, Eclipse  of   Corporate  Insurance  and  Rise 
of  Mutual  Insurance. 


In  Holland,  as  in  France,  all  forms  of  insurance  are  available  to 
the  employer.  He  may  carry  the  risk  himself,  become  a  member  of  a 
cooperative  or  mutual  insurance  association,  insure  himself  in  a  stock 
company  or  place  his  insurance  in  the  State  insurance  department, 
which  bears  the  title  of  Royal  Insurance  Bank.  While  these  various 
systems  are  open  to  all  alike,  they  are  far  from  competing  on  equal 
terms.  Employer's  self  insurance  is  under  the  greatest  handicap  of  all 
and  is,  consequently,  the  least  favored.  On  the  other  hand,  the  Royal 
or  State  Bank  enjoys  certain  important  advantages,  which  ought  to  put 
it  in  the  lead  of  all  rivals. 

To  begin  with,  the  debit-side  of  accident  insurance  underwriting  is 
made  up  practically  of  two  items — administrative  expenses  and  losses. 
Now,  because  under  the  Dutch  system,  accident  claims  are  settled  for  all 
writers  of  risks  through  the  State  Bank,  rival  insurers  are  unable  to 
secure  any  advantage  over  that  institution  in  the  important  matter  of 
losses.  No  opportunity  is  afforded  them  to  demonstrate  that  they  can 
adjust  losses  more  expeditiously  or  more  cheaply  than  the  Government 
officials.  Only  in  the  item  of  expenses  have  they  a  chance  to  better 
the  record  of  the  State  Bank.  Here,  however,  the  contest  is  again  un- 
equal. Every  risk  not  placed  elsewhere  falls  to  the  Government  insti- 
tution, which  thereby  is  dispensed  from  the  necessity  of  employing  an 
agency  force.  Furthermore,  it  enjoys  the  use  of  the  mails  free  of 
charge.  Again,  half  of  all  the  salaries  of  the  higher  officials  of  the 
bank,  or  about  two-fifths  of  its  total  administrative  expenses,  are  paid 
by  the  central  Government.  The  remaining  three-fifths  are  divided 
among  all  those  insuring  workingmen's  risks  according  to  the  amounts 
respectively  underwritten  by  them.  Thus,  if  in  any  given  year  the 
private  insurers  insure  one-half  of  all  workers  salaries,  such  insurers 
would  then  be  called  upon  to  pay  one-half  of  60  per  cent,  or  30  per 
cent,  of  the  State  Bank's  administrative  expenses.  In  other  words,  be- 
sides meeting  their  own  quota  of  expenses  they  must  also  contribute 
largely  towards  those  of  an  institution  carrying  on  an  insurance  busi- 
ness in  competition  with  themselves. 

With  various  expense  items,  which  its  competitors  are  called  upon 
to  meet,  thus  taken  care  of,  the  State  Bank,  whose  aim  is  to  furnish  in- 
surance at  cost  and  not  for  a  profit,  ought  to  be  in  a  position  to  make 
lower  premium  rates  than  anyone  else.  One  would  expect  therefore  to 
find  by  far  the  larger  part  of  existing  accident  risks  insured  with  the 

48 


State  institution.     Such  has,  however,  not  proved  to  be  the  case,  as  a 
glance  at  the  following  table  will  show: 


Total 
salaries 
Year.  Florins. 

1903  226,046,000 

1904  251,212,700 

1905  264,803,000 

1906  280,799,800 

1907  292,401,500 

1908  297,164,000 

1909  312,092,300 

1910  330,612,100 

1911  349,761,000 

1912  364,000,000 

Insured  by 
Year.  Mutual  Comp. 

1903  38,100,000 

1904  48,200,000 

1905  62,200,000 

1906  75,700,000 

1907  85,600,000 

1908  92,000,000 

1909  104,400,000 

1910  120,000,000 

1911  134,000,000 

1912  155,600,000 


Salaries 

open  to 

Insured  by 

competition. 

State  Bank. 

Pet. 

198,565,000 

72,341,000 

36.4 

219,460,000 

65,891,000 

30. 

230,780,000 

66,356,000 

28.8 

240,890,000 

69,925,000 

28.6 

254,607,000 

89,879,000 

35.2 

256,224,000 

124,323,000 

48.5 

271,000,000 

132,800,000 

48.6 

285,700,000 

136,500,000 

48. 

300,950,000 

134,525,000 

44.7 

134,000,000 

Pet. 
19.2 
22. 

26.9 

30.9 

33.5 

35.9 

38.5 

42. 

47.8 


Insured  by 

Stock  Comp. 

88,124,000 

105,358,000 

102,224,000 

99,300,000 

79,100,000 

39,891,000 

33,800,000 

29,200,000 

32,400,000 


Pet. 
43.4 
48 
43.3 
40.5 
31.3 
15.6 
12.9 
10. 
7.5 


In  the  column  of  total  salaries  insured  are  included  the  wages  paid 
by  those  employers  carrying  their  own  insurance.  These  are  now  but 
a  handful  in  number,  comprising  the  leading  municipalities,  certain 
Government  departments  and  the  principal  railway  system,  which  have 
always  insured  their  own  risks.  The  wages  paid  by  these  self  insurers 
should  therefore  be  deducted,  as  has  been  done  in  the  second  column,  in 
order  to  obtain  a  correct  estimate  of  the  total  percentage  of  business 
open  to  competition  secured  by  the  several  systems  of  insurance.  While 
permissible  on  making  a  minimum  deposit  of  30,000  florins,  self  insur- 
ance by  individual  industrial  employers  no  longer  occurs.  One  reason 
for  this  is  that,  if  an  accident  happens,  the  full  purchase  value  of  the  in- 
jured man's  annuity  must  be  deposited  by  the  insurer  with  the  Gov- 
ernment bank,  either  in  cash  or  in  the  shape  of  securities.  If  he  is  the 
employer  himself,  no  part  of  this  fund  is  ever  returned,  even  though 
the  victim  should  die  the  next  day.  A  corporation,  on  the  other  hand, 
would  in  such  case  receive  its  securities  back.  On  account  of  this  dis- 
crimination and  because  those  insured  in  a  large  organization  obtain 
certain  advantages  free  of  cost,  such  as  advice  in  legal  matters,  em- 
ployers' self-insurance  by  owners  of  industrial  plants  has  been  elimi- 

49 


nated  in  Holland,  leaving  only  State,  mutual  and  corporate  insurance  to 
dispute  the  field.  This  last  branch  is  only  open  to  domestic  corpora- 
tions— all  foreign  companies  being  excluded. 

Besides  the  State  Bank,  there  were  originally  in  competition  eight 
stock  companies  and  one  employers'  mutual  association.  At  the  begin- 
ning, the  stock  companies  were  far  ahead  in  the  amount  of  business  se- 
cured and  held  their  own  until  1907.  In  that  year,  one  of  the  com- 
panies, owing  to  heavy  losses  sustained,  ceased  insuring  risks  and  was 
followed  later  by  three  other  companies,  leaving  only  four  active  to-day. 

The  salaries  insured  by  these  companies  declined  rapidly  after  1906, 
until  1909,  since  which  date  the  amount  has  remained  almost  stationary. 
It  is  evident  therefore  that  the  stock  companies,  handicapped  as  they 
are,  have  been  conducting  a  losing  fight.  Nevertheless,  they  are  able 
to  hold  their  own  and  underbid  the  State  Bank  on  one-tenth  of  the  possi- 
ble business.  That  they  find  it  profitable  to  accept  these  risks  at  lower 
terms  than  demanded  by  the  Government  clearly  shows  the  premium 
rates  of  the  State  Bank  to  be  in  many  instances  too  high.  As  the 
authorities  move  slowly  in  changing  rates,  the  stock  companies  will 
probably  hereafter  always  find  some  lines  of  accident  insurance  which 
they  can  handle  to  advantage.  Employers,  who  would  rather  pay  a 
fixed  premium,  will  always  prefer  them  to  a  mutual  organization, 
where  the  rate  varies  according  to  losses  incurred.  But,  so  long  as 
conditions  in  Holland  remain  unchanged,  they  will  continue  to  play  only 
a  minor  role  in  the  insurance  of  accident  compensation. 

Like  that  of  the  stock  companies,  the  amount  of  salaries  insured  by 
the  State  Bank  remained  stationary  until  1906.  With  the  decline  of  the 
companies  in  1907,  the  figures  of  the  bank  begin  to  rise.  In  1910 
they  reached  their  maximum  and  have  since  remained  at  the  same 
figure,  with  a  decline  in  the  relative  percentage  of  all  open  risks  under- 
written from  48  to  43  per  cent.  State  insurance  in  Holland  appears 
therefore  to  have  passed  its  zenith  and  to  be  now  on  the  decline.  After 
having  held  the  lead  for  the  four  years  1907-1911  in  the  amount  of 
salaries  insured,  the  State  Bank  in  1912  dropped  to  second  place,  having 
been  out-distanced  by  its  strongest  and  most  successful  competitor,  the 
Employers'  Mutual  Association.  Although  the  total  of  workers'  salaries 
insured  increased  some  10  per  cent  between  1910  and  1912,  the  amount 
insured  in  the  State  Bank  barely  held  its  own.  Whatever  new  business 
offers  itself  now  is  secured  by  its  competitors. 

From  the  outset,  it  was  easy  to  foresee  that  employers  mutual  or 
cooperative  insurance  would  be  the  kind  most  likely  to  make  headway 
against  the  system  of  Government  insurance  in  vogue  in  Holland. 
Furnishing  its  members  protection  against  risks  at  cost  price,  dis- 
pensing with  an  agency  force  and  all  participants  directly  profiting 
through  losses  being  kept  down,  this  form  of  private  insurance  should 
compete  on  more  equal  terms  than  any  other  with  the  State  Bank. 
Such,  indeed,  has  proved  to  be  the  case  as  the  figures  of  its  steady  and 
uninterrupted  growth  from  year  to  year  in  the  amount  of  salaries 
underwritten  plainly  indicates.  Starting  in  1903  with  the  least  amount 

50 


of  all  or  only  one-fifth  of  all  salaried  risks,  mutual  insurance  took  the 
lead  in  1912  with  47  per  cent  of  all  risks  covered.  In  nine  years,  its 
business  has  quadrupled,  while  that  of  the  State  Bank  has  merely 
doubled. 

In  Holland,  therefore,  employers'  mutual  has  to-day  outstripped  and 
surpassed  State  insurance  in  amount,  through  being  able  to  offer  lower 
rates  than  those  demanded  by  the  Government  authorities.  Its  striking 
superiority  in  this  respect  is  clearly  demonstrated  by  the  following 
table: 

Salaries  insured       Prem.  based  Actual 

in  mut.  system,     on  gov.  rates.         prem.  paid. 
Year.  Florins.  Florins.  Florins. 

1903    38,100,000  865,000  729,000 

1904    48,200,000  1,121,000  1,060,000 

1905    62,200,000  1,537,000  1,335,000 

1906    75,500,000  1,776,000  1,490,000 

1907    85,600,000  2,021,000  1,599,000 

1908    92,000,000  2,449,000  1,575,000 

1909    104,400,000  3,310,000  2,133,000 

1910    120,000,000  4,187,000  2,346,000 

1911    136,000,000  4,703,000  2,808,000 

1912    155,600,000  5,310,000  3,327,000 

Total      917,800,000         4  7,279,000  18,402,000 

Saving  over 

Year.  gov.  figures.  Pet. 

1903 136,000  15.7 

1904 61,000  5.4 

1905 202,000  13.1 

1906 286,000  16.1 

1907 422,000  20.9 

1908 874,000  35.7 

1909 1,177,000  35.6 

1910 1,841,000  44. 

1911 1,895,000  40.3 

1912 1,983,000  37.4 


Total     8,877,000 


32.5 


To  the  above  figure  of  savings  should  be  added  the  sum  of  139,000 
florins  found  to  have  been  overcharged  the  mutual  association  for  losses 
from  1903-1907.  The  total  actual  saving  is  thus  brought  up  to  9,016,000 
florins  or  33  per  cent  over  what  the  employers  would  have  had  to  pay 
if  they  had  been  obliged  to  insure  with  the  State.  If  the  State  pre- 
miums be  estimated  at  100,  mutually  insured  employers  paid  one-third 
less  or  at  the  rate  of  67.  In  other  words,  the  average  premiums  de- 
manded by  the  Government  for  the  ten  years  1903-1912  have  been  al- 

51 


most  50  per  cent  higher  than  what  those  insured  mutually  have  found 
sufficient  to  meet  all  losses  and  expenses.  And  even  with  its  two-fifths 
higher  premiums  and  with  the  major  part  of  its  administrative  expenses 
contributed  from  outside  sources,  the  State  Bank  failed  to  come  out 
even.  At  the  end  of  1911,  the  total  deficit  in  its  accounts  figured  about 
1,800,000  florins.  The  excessive  cost  in  Holland  of  the  Government  sys- 
tem of  insurance  as  compared  with  that  offered  by  a  well-managed  and 
economically  run  private  organization  is  thus  conclusively  proven. 

The  question  may  be  asked,  why,  if  so  much  more  costly,  the  State 
Bank  should  yet  be  able  to  secure  two-fifths  of  all  the  possible  busi- 
ness. The  answer  is  to  be  found  in  the  fact  that  Holland  is  a  country 
where  small  employers  predominate  and  where  large  industrial  estab- 
lishments are  comparatively  few  in  number.  The  last  available  statistics 
show  that  in  1910  there  were  89,728  employers  insured,  with  631,307 
workmen,  or  seven  workmen  on  the  average  for  each  separate  employer. 
For  the  State  Bank  alone  the  figures  were  75,179  employers  and  291,731 
workmen,  or  4  workmen  per  employer,  showing  that  the  less  im- 
portant risks  were  generally  insured  with  the  Government  office.  This 
has  been  the  case  from  the  start.  The  small  employer  with  only  two  or 
three  workmen  to  insure  is  under  no  particular  inducement  to  make  a 
change  because  the  total  premium  he  has  to  pay  is  not  large  in  amount 
and  the  possible  saving  to  be  effected  would  not  in  any  case  exceed  a 
few  dollars.  Consequently,  he  is  apt  to  stick  to  the  State  Bank,  while 
establishments  of  any  size  or  importance,  as  a  rule,  insure  elsewhere. 
But  for  this  hold  upon  the  small  employers,  the  amount  of  insurance 
effected  through  the  Government  office  would  be  very  much  less. 

In  order  to  ascertain  why  Government  insurance  is  so  much  more 
expensive,  one  need  only  contrast  the  methods  of  the  State  Bank  with 
those  of  the  Employers'  Mutual  Association.  This  latter,  known  as  the 
Central  Bank  for  Employers'  Risks,  is  an  incorporated  association,  on 
January  1,  1913,  serving  the  interests  of  5,275  employers,  with  some 
267,000  workmen  in  their  pay.  Its  members  consist  of  96  large  em- 
ployers carrying  their  risks  directly  with  the  Central  Bank,  and  41  af- 
filiated mutual  associations,  to  which  the  remaining  5,179  employers 
belong,  with  an  average  membership  of  130  employers  each.  Each  as- 
sociation levies  its  own  premiums  based  on  losses  suffered  and  on  its 
quota  of  the  expenses  of  the  Central  Bank.  That  Bank,  in  turn,  acts  as 
a  clearing  house  for  all  the  associations,  settles  all  losses  as  called  upon 
by  the  State  Bank,  provides  a  legal  bureau  to  pass  on  disputed  claims 
and  maintains  a  technical  department  for  the  inspection  of  plants  and  to 
suggest  safeguards  against  accidents. 

Through  adopting  the  plan  of  dividing  its  members  into  small 
groups  and  making  each  group  responsible  for  accident  losses  suffered 
in  the  establishments  of  those  belonging  to  it,  every  individual  em- 
ployer insured  in  the  Central  Bank  is  under  the  strongest  possible 
stimulus  to  reduce  the  number  of  accidents  as  much  as  possible  among 
his  employees.  If  the  indemnities  paid  his  workmen  for  injuries  re- 
ceived in  any  given  year  are  materially  cut  down,  the  owner  knows 

52 


that  it  means  a  saving  to  him  in  the  shape  of  a  reduced  premium.  He 
has  the  greatest  incentive  therefore  to  adopt  safety  appliances  and  to 
enforce  the  observance  of  preventive  rules.  Contrast  to  this  attitude, 
the  position  of  an  employer  insured  in  the  State  Bank.  Once  he  has 
paid  his  premium,  it  is  immaterial  from  a  pecuniary  standpoint  whether 
accidents  among  his  employees  occur  frequently  or  not.  So  long  as  his 
equipment  measures  up  to  the  ordinary  standard,  he  has  to  fear  no  in- 
crease in  his  premium  rates.  As  one  of  sixty  or  more  thousand  employ- 
ers insured,  any  precautions  against  accidents  taken  by  him  in  his  single 
establishment  will  have  only  a  very  remote  influence,  if  any,  towards 
lowering  the  charge  for  the  insurance  in  his  particular  industry.  Un- 
able to  directly  influence  results  through  any  especial  action  of  his 
own,  therefore,  the  employer  insured  in  the  State  Bank  has  no  particular 
cause  to  seek  to  reduce  the  number  or  frequency  of  accidents. 

How  this  indifference  as  to  the  number  of  accidents  operates  to  the 
disadvantage  of  the  State  Bank  appears  from  the  following  table: 

Year.  Accidents  per  Million  Florin  Wages. 

State.  Companies. 

1903    153  165 

1904    186  186 

1905    225  192 

1906    262  209 

1907    286  207 

1908    258  179 

1909    236  170 

1910    223  171 

Accidents,  therefore,  are  considerably  more  frequent  among  those 
insured  in  the  State  Bank.  Yet  the  contrary  ought  to  be  the  case.  As 
has  just  been  pointed  out,  Holland  is  a  country  where  small  industry 
prevails.  In  1910  69,074  employers,  or  78%  of  all,  had  5  workmen  or 
less  in  their  establishments,  or  a  total  of  92,802  workmen.  Such  small 
employers  are  the  best  risks.  The  official  figures  of  accidents  per  1,000 
workmen,  given  below,  indicate  this: 

1903.  1904.  1905.  1906.  1907.  1908.  1909.  1910. 

For  all   employers 65.9  77  83.6     92  94.7     68.4  72.9     69.5 

For  employers  with  less 

than  5  workmen   47.7  57.4  64        69.4  73.9     84.9  79.9     77.5 

In  the  latter  category,  the  average  number  for  the  eight  years  comes 
to  65^,  as  against  82  in  the  former.  But,  as  previously  indicated,  it 
is  just  the  small  and  best  class  of  employers  from  a  risk  standpoint, 
which  is  usually  insured  in  the  State  Bank.  Yet,  instead  of  making 
a  better  showing,  however,  as  would  be  expected,  its  accident  ratio  per 
1,000  workmen  is  decidedly  higher  than  that  of  other  insurers. 

Besides  excelling  in  the  number,  the  State  Bank  also  formerly  led  in 

53 


the  loss  per  accident.     For  the  five  years  1903-1907,  the  losses  ran  in 
florins  as  follows: 

Year.  State.  Companies.  Year.  State.  Companies. 

1903 102.78        90.66  1906 115.67        80.93 

1904 112.58         94.24  1907 102.56         74.70 

1905 114.34         89.24 

An  injured  workman  insured  in  the  State  Bank,  therefore,  received 
twenty-five  per  cent  more  indemnity  on  the  average  than  one  insured 
elsewhere.  That  was  not  due  to  any  favoritism,  but  rather  to  lack 
of  proper  control  by  the  Government  officials.  For  example,  a  casual 
dock  laborer  injured  with  one  may  be  able  to  resume  work  with  an- 
other employer  long  before  his  period  of  estimated  disability  has  ex- 
pired. In  such  a  case,  the  Government  officials,  having  had  no  adequate 
system  of  check,  would  continue  to  pay  the  regular  indemnity  as  before. 
Those  privately  insured,  however,  make  it  a  point  to  keep  tab  on  their 
workmen,  and  the  laborer's  recovery  would  in  all  likelihood  be  observed 
and  the  authorities  notified  to  stop  any  further  payment  of  indemnity. 
With  a  higher  average  loss  and  a  relatively  larger  number  of  acci- 
dents, it  is  not  surprising  to  find  that  in  1907  the  total  losses  of  the 
State  Bank  amounted  to  2.79%  of  salaries  insured,  against  1.70%  for 
those  of  the  private  companies,  or  an  excess  of  64%. 

Since  1908,  however,  the  showing  of  the  State  Bank  as  regards 
losses  per  accident  has  been  as  favorable  as  those  of  the  companies. 
The  last  figures  reported  run  as  follows: 

r-Losses  per  Accident-^        r-Losses  to  Wages  Insured— A 

Year.  State.  Companies.  State.  Companies. 

r- florins -^        r- per  cent > 

1908    84.57  70.64  2.13  1.41 

1909    75.60  80.54  1.74  1.55 

1910    69.03  77.79  1.51  1.51 

Through  having  to  consider  only  a  comparatively  small  number, 
when  it  comes  to  an  apportionment  of  losses,  the  premiums  of  th,e 
Central  Bank  can  be  more  quickly  and  fairly  adjusted  to  meet  actual 
costs  than  those  of  the  State  institution.  The  latter  has  always  pro- 
ceeded on  the  theory  that  stability  in  premium  rates  is  the  great  thing 
to  be  desired.  The  law  itself  prescribes  that  rates  shall  be  revised  at 
the  end  of  every  five  years,  and  it  is  very  seldom  that  any  particular 
rate  is  altered  during  the  five  year  period.  The  red  tape  that  has 
to  be  gone  through  with  in  each  instance  acts  as  a  deterrent  against 
effecting  any  change. 

Furthermore,  in  raising  or  lowering  the  tariff  of  charges,  the 
authorities  are  governed  more  or  less  by  their  official  statistics  of  ac- 
cidents and  losses  in  the  various  branches  of  industry.  While  very 
full  and  complete,  their  publication  must  necessarily  be  several  years 
delayed  in  each  instance  on  account  of  their  very  elaborateness.  In- 

54 


deed,  those  from  1908  on  have  yet  to  be  published.  Now,  in  Holland, 
as  elsewhere,  accident  risks  in  different  branches  of  trade  or  industry 
may  change  very  quickly  in  this  age  of  invention  and  improvement, 
and  often  from  the  most  unexpected  causes.  For  example,  who  could 
have  foreseen  that  employees  in  butcher  shops  were  to  become  a  much 
more  dangerous  accident  risk  in  consequence  of  meat  being  delivered  in 
the  Dutch  cities  by  young  men  or  boys  on  bicycles,  where  formerly  they 
went  on  foot?  Under  its  methods,  a  number  of  years  must  alwayjs 
elapse  before  the  State  Bank  will  realize  that  its  premiums  in  that  par- 
ticular trade  are  too  low  to  cover  the  losses,  and  perhaps  an  even 
longer  period  before  its  rate  will  be  raised.  Unlike  the  Central  Bank, 
where  premiums  are  automatically  adjusted  every  year  to  suit  the  vary- 
ing results  in  each  particular  branch  of  industry,  the  rates  of  the  State 
Bank  are  generally  based  on  conditions  as  they  were  three  or  four 
years  previous.  Consequently,  through  its  inability  to  speedily  change 
rates,  one  would  naturally  expect  to  find  the  premiums  of  the  govern- 
ment institution  deviating  from  the  normal  more  or  less  and  being 
either  too  low  or  too  high.  And  that  has  proved  to  be  the  case.  For 
the  first  five  year  period  after  the  enactment  of  the  law,  namely,  from 
1903-1907,  the  State  Bank  showed  a  deficit  of  4,189,000  florins,  as 
against  total  premium  receipts  of  7,233,000  florins.  Of  this  total 
deficit,  due  to  a  variety  of  causes,  2,520,000  florins  was  ascribed  to 
insufficiency  of  premium  receipts.  For  the  Bank  to  have  covered  costs, 
therefore,  its  premium  income  should  have  been  over  one-third  higher. 
If  100  be  taken  as  the  correct  standard,  the  actual  premium  receipts  for 
1903-07  were  only  on  the  basis  of  73. 

From  this  era  of  too  low  premiums  and  recurring  deficits,  we  find 
in  the  second  five  year  period  from  1908-1912  that  the  Bank  has 
achieved  a  surplus  in  every  twelve  months,  or  a  total  profit  of  about 
2,850,000  florins.  Its  net  deficit  now  stands  at  about  1,350,000  florins. 
Taking  the  figures  for  1911,  which  are  the  last  published,  the  gross 
premiums  yielded  3,300,000  florins  and  the  profit  coming  to  the  bank 
through  excess  of  premium  receipts  amounted  to  570,000  florins.  In- 
stead of  an  actual  premium  rate  of  2.44,  one  of  2.02  per  cent  would  have 
sufficed  for  the  Bank  to  have  come  out  even.  Its  present  rates,  there- 
fore, show  an  excess  of  over  20%  above  actual  cost  figures.  For  1910, 
the  excess  was  40%. 

Again,  taking  the  full  figures  for  1903-1910,  the  Bank's  losses  as 
contrasted  with  premiums  run  as  follows: 

Year.  Per  cent.  Year.  Per  cent. 

1903 82.2  1907 154.9 

1904 112.4  1908 104.2 

1905 149.7  1909 125. 

1906 184.9  1910 166.6 

Starting  with  a  surplus  in  1903,  the  Bank  met  with  a  loss  in  the 
next  twelve  months.  If  this  had  occurred  to  a  private  company,  it  is 
safe  to  say  that  rates  would  have  been  promptly  raised  to  overcome 

55 


the  deficit.  Nothing  was  done  by  the  officials  of  the  Bank,  however, 
so  that  its  loss  in  the  two  following  years  reached  alarming  propor- 
tions. Only  in  1907,  or  three  years  after  the  deficit  had  first  de- 
clared itself,  were  rates  partly  raised  and  the  loss  partially  reduced. 
The  slowness  of  Government  action,  even  in  cases  calling  for  prompt 
and  decisive  proceedings,  could  not  be  better  illustrated. 

Perhaps  the  most  instructive  example  of  the  methods  followed  by 
the  State  Bank  is  to  be  found  in  the  insurance  of  longshoremen,  }or 
those  engaged  in  the  loading  of  ships.  As  a  basis  for  its  tariff  the 
Bank  followed  the  Austrian  statistics  of  1895  and  1896,  showing  48 
serious  accidents  in  this  calling,  involving  the  payment  of  14,732  florins 
indemnity.  On  this  showing  a  premium  of  2.64  per  cent  works  out.  The 
Bank  consequently  started  with  average  rates  of  4  per  cent  in  this 
branch.  The  loading  of  ships,  however,  is  in  Holland  a  very  dangerous 
occupation,  varying  in  risk  according  to  the  size  and  equipment  of  the 
vessel,  the  manner  of  loading,  whether  elevators  are  used  or  not,  and 
the  intensity  or  speed  with  which  the  work  is  carried  on.  From  the 
very  start  the  Bank's  premium  rate  proved  to  be  entirely  too  low, 
entailing  losses  as  follows: 

Losses  to 
Year.  Premiums.          Losses.  Deficit,  premiums. 

1903  104,078  227,918  123,840  219 

1904 112,573  446,632  334,059  396.8 

1905 167,044  653,072  486,028  391 

1906  . . . . 194,102  867,557  673,455  447 

1907 440,264  1,180,101  739,837  268 

Although  total  premiums  in  1903,  the  very  first  year,  did  not  cover 
half  the  losses,  the  same  disastrous  rate  figure  was  adhered  to  for 
the  three  following  years.  Losses  increased  by  leaps  and  bounds  until 
in  1906  they  were  four  and  one-half  times  the  premiums.  Finally,  in 
1907,  while  the  deficit  was  larger  than  ever,  premium  receipts  began 
to  rise  due  to  rates  having  been  at  last  increased.  Instead  of  at  4,  as 
originally,  the  average  rate  in  this  industry  at  present  varies  from 
15  to  30  per  cent. 

Although  the  government  rates  up  to  1907  were  often  too  low,  they 
were  in  frequent  instances  fixed  too  high.  The  following  table,  giv- 
ing conditions  at  the  end  of  1907,  shows  this: 

Per  cent  of  wages  insured 

State  Bank  Loss  outside  State  Bank. 

Risks.                                  Premium.  Rate.  1903.                 1907. 

Painters    3.673  1.46  81.22                 87.30 

Plasterers   3.673  2.91  82.15                 86.46 

Carpenters    4.521  1.92  72.71                 81.49 

Masons    3.673  2.89  74.38                 79.13 

In  thus  quoting  and  adhering  to  premiums  far  in  excess  of  the 
true  risk  rate,  the  Bank  made  it  easy  for  its  rivals  to  secure  from 

56 


year  to  year  a  constantly  increasing  percentage  of  the  business  in  the 
above  trades. 

Looking  at  the  reverse  of  this  picture,  the  next  table  illustrates 
what  occurred  when  the  Bank's  official  rates  proved  too  low  to  cover 
losses. 

Percentage  wages  insured 

Risk.  outside  State  Bank. 

1903.  1907. 

Blacksmiths    60.49  26.88 

Pottery  workers    41.87  0.11 

Glass   blowers    67.42  0.00 

Here  other  insurers  have  either  wholly  or  in  greater  part  withdrawn 
from  the  field,  leaving  to  the  State  Bank  the  doubtful  satisfaction 
of  carrying  on  a  losing  business  more  or  less  alone. 

Coming  back  to  the  variance  in  methods  between  the  employers 
mutual  or  Central  Bank  and  those  of  the  government  institution,  the 
branch  or  minor  associations  of  the  former  have  not  only  a  limited 
number  of  members,  but  are  made  to  include  as  far  as  possible  only 
those  engaged  in  one  form  of  industry,  for  instance,  sugar  refining  or 
carpet  making.  This  grouping  of  employers  by  trades  is  deemed  most 
desirable  both  for  purposes  of  general  information  and  because  it  leads 
to  a  better  understanding  of  the  causes  of  and  possible  preventive 
measures  against  accidents  in  each  particular  industry.  Those  en- 
gaged in  the  same  business  can  learn  far  more  accurately  than  can  any 
outsider  whether  an  employer  is  financially  responsible  or  not,  the  con- 
dition his  machinery  is  in,  whether  or  not  he  has  taken  proper  pre- 
cautions against  accidents  in  his  work-rooms,  the  state  of  discipline 
among  his  workmen  and  whether  they  observe  properly  precautionary 
rules  and  regulations.  In  this  way,  the  Central  Bank  obtains  a  much 
more  accurate  knowledge  than  can  its  State  rival  of  the  degree  of  risk 
incurred  in  different  establishments.  Each  local  association  has  its 
committee  on  admissions  to  pass  on  the  qualifications  of  candidates; 
and,  as  far  as  practicable,  only  employers  animated  with  the  common 
purpose  of  reducing  accident  losses  to  the  lowest  feasible  limit  and  of 
safeguarding  the  lives  of  their  employes  in  every  possible  respect  are 
taken  in.  If  members  fail  at  any  time  to  install  acceptable  methods 
of  protection  or  allow  their  workmen  to  become  careless  in  observing 
rules  of  safety,  they  are  asked  to  withdraw.  Thus  the  Central  Bank  is 
enabled  to  carefully  guard  against  losses  arising  through  changes  in  the 
degree  of  risk  and  to  hold  its  insured  employers,  through  fear  of  ex- 
pulsion, up  to  a  high  standard  in  methods  of  safety. 

Neither  of  these  conditions  exist  in  the  case  of  the  State  Bank. 
It  cannot  threaten  expulsion  in  case  of  imperfect  equipment,  for  it 
must  insure  all  risks.  Through  its  failure  to  keep  in  close  touch 
with  the  changes  occurring  in  classes  of  or  individual  risks,  it  is  at 
a  great  disadvantage  as  compared  with  other  insurers.  As  an  instance 
of  this  may  be  cited  the  case  of  the  blacksmiths.  In  1903  they  were  a 

57 


fair  risk  and  were  insured  as  such  both  in  the  State  and  Central 
Banks.  By  1906,  however,  accidents  had  so  increased  in  this  trade  that 
the  risk  had  become  a  much  greater  one.  Accordingly,  we  find  the 
Central  Bank  abandoning  this  branch  of  insurance  and  directing  its 
customers  to  the  State  Bank.  Later  on,  when  the  government  rates 
were  raised  to  correspond  with  the  increase  in  risk,  we  find  the  Cen- 
tral Bank  once  more  competing  for  this  insurance.  Again  in  1909,  the 
government  premium  for  peat  gatherers  was  lowered.  This  was  deemed 
insufficent  by  the  Central  Bank  to  cover  losses  in  that  branch.  It 
therefore  instantly  disbanded  its  own  local  association  for  this  trade 
and  had  the  members  insure  in  the  State  Bank.  In  this  way,  all  un- 
profitable individual  or  trade  risks  are  unloaded  upon  the  latter  in- 
stitution to  the  detriment  of  its  finances  and  to  the  benefit  of  those 
of  its  competitors. 

Although  its  losses  from  accidents  are  so  very  much  higher  in 
comparison  with  those  incurred  by  other  insurers,  the  government  in- 
surance department  has  made  no  systematic  effort  to  find  out  ways  of 
cutting  down  the  number  of  accidents.  Mention  has  been  made  before 
of  the  Central  Bank  maintaining  a  special  bureau  for  this  very  purpose, 
which  is  constantly  making  valuable  suggestions  and  devising  appli- 
ances for  reducing  the  chances  of  accidents.  The  low  costs  shown  by 
the  Central  Bank  are  in  no  small  degree  due  to  the  work  of  this 
preventive  bureau.  Frequently  it  has  happened  that,  where  some  rec- 
ommended improvement  has  entirely  done  away  with  a  certain  kind  of 
accident,  the  government  factory  inspectors  have  then  made  its  adop- 
tion compulsory.  But  the  point  to  emphasize  is  that  the  invention  of 
such  safety  devices  and  improvements  is  due  to  private  initiative  and 
not  to  government  action.  The  State  follows,  but  towards  the  dis- 
covery of  preventive  measures  it  does  practically  nothing. 

Compared  to  losses  incurred  for  workingmen's  accidents  (which  in- 
clude the  indemnities  paid  for  other  insurers),  the  administrative  ex- 
penses of  the  State  Bank  run  as  follows: 

1903.         1904.         1905.         1906.        1907.         1908.         1909.         1910. 
12.4%       14.5%       19.2%       19.5%       21.5%       25.7%       27.7%       26.5% 

Unfortunately,  only  the  total  of  these  expenses  is  given,  and  no 
attempt  is  made  to  subdivide  them.  In  the  nature  of  things,  however, 
they  must  run  pretty  high  on  account  of  the  centralized  system  of  the 
bank.  Every  loss — no  matter  how  trivial — has  to  be  referred  to  the 
head  office  in  Amsterdam  for  settlement,  which  entails  far  more  cor- 
respondence and  clerical  work  than  if  adjustments  were  made  directly 
on  the  spot.  The  administrative  costs  show  an  upward  tendency  and  in 
1910  were  21^%  of  losses  and  expenses  combined.  If,  in  order  to  put 
the  Bank  on  an  equal  footing  with  a  private  company,  there  be  added 
to  the  percentage  of  21.5%  for  1910,  10%  for  the  cost  of  an  agency 
force  and  1%%  more  for  free  postage,  the  total  expense  would  be  33 
per  cent. 

58 


Advocates  of  Scate  insurance  may  claim  that  the  superior  showing 
of  the  Central  Bank  is  due  to  its  system  of  selected  risks.  It  accepts 
only  those  which  measure  up  to  a  high  standard,  and  rejects  all  others. 
If  obliged  to  insure  every  employer,  good,  bad  or  indifferent,  as  is  the 
State  Bank,  its  saving  in  expenses  over  the  figures  of  the  government 
office  would  not  be  nearly  so  great.  A  comparison  between  the  two 
systems,  it  may  therefore  be  contended,  is  unfair,  because  they  do  not 
serve  the  same  class  of  risks.  In  answer  to  that  contention  one  should 
recall  that  both  systems  are  intended  to  furnish  insurance  at  cost.  The 
odds  should  be  in  favor  of  the  State  Bank,  on  account  of  its  having  to 
pay  only  a  part  of  its  own  administrative  expenses.  In  1911  such  ex- 
penses amounted  to  1,292,000  florins,  of  which  the  State  Bank  had  to 
meet  only  347,000;  whereas  the  Central  Bank,  besides  footing  its  own 
administration  expenses  of  168,500  florins,  had  to  contribute  317,000 
florins  towards  those  of  the  State  Bank.  If,  in  spite  of  this  and  other 
advantages,  the  State  Bank,  in  order  to  come  out  even,  cannot  charge 
at  the  rate  of  70,  like  the  Central  Bank,  but  is  obliged  to  charge  at 
the  rate  of  100,  either  one  of  two  things  is  clear,  namely,  either  its 
expenses  are  unduly  higher  than  those  of  its  rival  or  its  method  of 
determining  premium  rates  is  entirely  wrong. 

Assuming  that  the  State  were  able  to  operate  as  cheaply  as  the 
Central  Bank,  it  should,  if  the  principle  of  cost  prevails,  quote  a  like 
figure  of  70  for  the  risks  insured  with  its  business  opponent.  If  it 
pleads  inability  to  do  so  because  obliged  to  accept  the  more  dangerous 
and  unprofitable  risks,  which  the  Central  Bank  is  at  liberty  to  discard, 
the  reply  is  that  the  remedy  lies  in  its  own  hands.  Although  obliged  to 
insure  everyone  who  applies,  the  State  Bank  may  fix  its  own  premium 
rates.  It  is  not  obliged  to  do  business  at  a  loss,  and,  if  its  tariffs  were 
properly  rated  and  kept  up  to  date,  the  private  companies  could  not  load 
it  down  with  the  unprofitable  risks.  That  they  do  so  is  its  own  fault, 
and  is  a  grave  reflection  on  its  management.  Not  its  obligation  to 
insure  all  comers,  but  lax  methods  and  improper  adjustment  of  pre- 
miums are  the  cause  of  its  excessive  loss  ratio.  If  the  experience  of 
the  Dutch  nation  is  to  count  for  anything,  State  insurance  of  occupa- 
tional accidents  would  not  appear  desirable  from  any  point  of  view. 
It  is  very  costly;  and,  far  from  being  a  check  upon,  it  tends  to  breed 
indifference  as  to  the  number  of  accidents. 

In  conclusion,  the  result  of  the  contest  in  Holland,  lasting  now  for 
over  ten  years,  between  State  and  private  agencies  in  the  field  of 
accident  insurance  has  been  to  prove  the  decided  superiority  of  the  lat- 
ter. Official  routine  methods,  slowness  of  action,  tenacious  clinging 
to  false  ideas  and  erroneous  conceptions  mark  the  proceedings  of  the 
one  system,  against  which  are  to  be  contrasted  up  to  date  measures, 
prompt  adaptation  to  changing  conditions  and  a  constant  watch  for 
possible  improvements.  The  outcome  strikingly  confirms  the  opinion 
of  those  who  believe  that  individual  effort  and  private  initiative  can 
always  be  counted  upon  to  produce  better  results  than  can  be  secured 
by  entrusting  the  conduct  of  an  ordinary  business  to  the  State. 

59 


AGRICULTURAL  ACCIDENT  INSURANCE  IN  HOLLAND. 


Voluntary    Compensation    Insured    in    Mutual    Associations — Favorable 

Experience. 

While  the  insurance  against  accidents  of  industrial  employees  has 
been  compulsory  in  Holland  since  March  1st,  1903,  the  statute  has  not 
yet  been  extended  to  include  accidents  occurring  in  agricultural  pur- 
suits. A  project  looking  to  that  end  was  submitted  to  the  Lower  House 
of  the  Dutch  Parliament  on  April  13th,  1905,  but  has  not  yet  been  en- 
acted into  law.  All  agricultural  workers,  cattle  growers,  nurserymen, 
florists,  market  gardeners,  keepers  of  woods  and  parks  and  those  en- 
gaged in  forestry  were  to  be  included  in  its  provisions.  No  regular 
wage  lists  were  to  be  required,  but  a  commission  was  to  determine  in 
each  instance  the  salary  of  the  workmen  injured,  the  total  amount  of 
salaries  to  be  charged  against  the  individual  employer  and  the  degree  of 
risk  incurred  by  each  separate  establishment  or  exploitation. 

Aside  from  this,  the  proposed  legislation  followed  closely  the  pro- 
visions of  the  act  covering  industrial  accidents,  and  centralized  the 
settlement  of  claims  and  the  payment  of  all  indemnities  in  the  hands  of 
the  State  insurance  department  at  Amsterdam.  The  extension  of  the 
accident  insurance  law  so  as  to  cover  also  agricultural  workers  is 
bound  to  occur  before  long.  The  leading  agricultural  societies  have  ex- 
pressed themselves  in  favor  thereof  because  agricultural  laborers,  being 
uninsured  and  thus  discriminated  against,  are  hard  to  obtain  since  in- 
dustrial workmen  have  obtained  the  benefit  of  the  accident  law. 

In  its  original  draft  of  the  law  of  1903,  the  authorities  planned  to 
make  a  government  monopoly  of  workingmen's  accident  insurance  and 
to  require  all  risks  to  be  carried  in  a  central  State  institution.  In  order 
to  forestall  a  like  attempt  on  the  part  of  the  government  when  it  comes 
to  include  agricultural  accidents  among  those  compulsorily  insured  and 
to  prove  that  such  risks  can  be  economically  and  satisfactorily  taken 
care  of  by  private  organizations,  two  employers  mutual  insurance  as- 
sociations have  been  started.  One  commenced  operations  on  January 
1st,  1909,  and  insures  against  accidents  in  horticultural  pursuits  only. 
The  second  and  more  important  started  exactly  a  year  later,  and  covers 
all  other  agricultural  accident  risks.  It  was  deemed  best  to  separate 
these  two  classes,  because  the  accident  risk  is  much  lower  in  horticul- 
ture and  because  of  the  different  units  of  organization  to  be  made  use 
of  in  the  two  professions.  In  horticulture  local  or  regional  associations 
are  preferable,  while  in  agriculture  associations  group  themselves  best 
by  provinces. 

Identical  in  their  purpose,  namely,  to  insure  employees  against  the 
consequences  of  accidents  at  the  employers'  expense,  these  two  associa- 
tions are  organized  on  the  same  general  lines.  Local  or  provincial  as- 
sociations are  formed,  each  managed  by  its  own  board  and  each  hav- 
ing a  number  of  local  committees  for  controlling  and  looking  after  ac- 

60 


cident  cases.  The  cost  of  treating  all  minor  accidents  is  borne  by  the 
various  provincial  associations,  which  further  determine  the  terms  at 
which  members  may  join  and  the  actual  wages  paid.  The  associations 
can  engage  in  other  forms  of  insurance  if  they  so  desire.  Each  asso- 
ciation has  its  board  of  arbitration,  with  employers  and  employees 
equally  represented  thereon,  to  decide  disputes  as  to  compensation. 
Only  two  disputed  cases  arose  in  1912. 

These  associations,  with  such  affiliated  employers  as  pay  salaries  in 
excess  of  50,000  florins  a  year,  form  and  are  members  of  a  central  asso- 
ciation, with  headquarters  in  Amsterdam.  This  central  association  bears 
the  expense  of  all  serious  accidents  involving  permanent  disability  or 
death,  thus  re-insuring  the  local  associations.  The  central  association  also 
furnishes  expert  technical  advice  on  the  prevention  of  accidents,  on  legal 
and  financial  questions,  and  regarding  safety  regulations.  In  short, 
two  underlying  principles  were  followed  in  the  formation  of  these  asso- 
ciations. The  first  was  the  greatest  possible  centralization  in  every- 
thing relating  to  financial  administration,  both  in  the  interest  of 
economy  and  also,  to  make  it  easier  to  meet  serious  losses.  The  second 
was  the  greatest  possible  decentralization  in  all  matters  relating  to  the 
treatment  and  settlement  of  accidents.  To  local  committees  is  left  the 
control  and  determination  of  the  medical  treatment  and  monetary  relief. 
How  efficacious  and  strict  a  watch  is  kept  over  all  cases  can  be  judged 
from  the  fact  that  52,000  laborers  insured  at  the  end  of  1912  were 
under  the  surveillance  of  253  separate  committees,  or  one  for  every  200 
employees.  Under  such  conditions,  simulation  and  exaggeration  of  ac- 
cidents by  the  workmen  is  very  difficult.  This  plan  of  local  committees 
to  supervise  accidents  is  in  direct  opposition  to  that  provided  in  the  law 
regarding  industrial  accidents,  under  which  all  matters  are  controlled 
and  settled  from  one  State  head  office  in  Amsterdam. 

In  starting  this  new  system  of  mutual  insurance,  many  possible 
adherents  were  deterred  from  joining  by  the  inability  to  determine  the 
cost  of  the  insurance  in  advance.  As  all  members  are  proportionately 
liable  for  losses,  the  premiums  to  be  paid  could  not  be  limited  before- 
hand, as  in  the  case  of  insurance  by  a  corporation.  To  overcome  this 
objection,  the  estimated  premiums  for  the  first  year  were  all  paid  in 
full  in  advance,  thus  enabling  the  associations  to  start  with  a  reserve 
fund.  In  consequence  it  has  not  been  necessary  to  call  on  members 
for  any  extra  contributions.  Premiums  are  high  enough  to  cover  a  reg- 
ular addition  to  the  reserve  funds  as  well  as  expenses  and  losses,  and 
are  levied  by  the  local  associations.  In  turn,  they  remit  to  the  central 
body  for  its  expenses. 

Passing  now  to  the  results  of  this  insurance,  it  should  be  noted 
that  indemnities  paid  under  it  are  on  the  same  scale  as  proposed  in 
the  Government's  bill  for  compulsory  insurance  of  agricultural  acci- 
dents. Consequently  a  fair  idea  of  the  risks  and  cost  of  such  insurance, 
if  made  universally  obligatory,  can  be  obtained  from  the  operations  of 
these  mutual  associations.  At  the  end  of  1912  they  insured  one-half  of 
all  employees  engaged  in  horticulture  and  about  one-tenth  of  those  in 

61 


agricultural  pursuits.     The  figures  for  the  two  classes  of  organizations 

BfcoTr  the  following  results  for  1912: 

Horti-  Agri- 
cultural, cultural. 

Local   associations    40  10 

Employers  insured   2,464  9,378 

Employees    insured    12,000  40,000 

Wages    insured    (florins)    about 5,000,000  14,000,000 

Expenses  and  losses   (florins) 31,381  144,747 

Per  100  florins  wages 0.65  1.04 

Losses    19,013  99,193 

Per  100  florins  wages 0.40  0.71 

Expenses   12,367  48,554 

Per  100  florins  wages 0.25  0.33 

Accidents    220  1,132 

Less  than  60  days'  disability 198  1,030 

Over  60  days  19  88 

Deaths    3  14 

Permanent  disability  4  9 

Contrasting  these  results  with  those  in  the  case  of  industrial  acci- 
dents, the  following  comparative  figures  appear: 

Horti-  Agri-  Indus- 
cultural,  cultural.  trial. 

Average  premiums    0.75  1.10  2.40  (1907) 

Accidents  per  1,000  workmen 18  28  81  (1911) 

Deaths  &  permanent  disability  per  1,000  0.58  0.57  8.00  (1911) 
Expenses     &    losses    per    100    florins 

wages    0.65  1.05  2.22  (1907) 

In  the  Dutch  mutual  associations,  premiums  and  settlements  are 
based  on  actual  payrolls,  differing  therein  from  the  German  system. 
The  payroll  system  works  smoothly  and  satisfactorily.  Owing  to  the 
lack  of  sufficient  data,  no  risk  classes  have  as  yet  been  established.  It 
is  intended,  however,  ultimately  to  introduce  that  system.  A  beginning 
has  been  made,  of  course,  in  differentiating  horticultural  from  other  agri- 
cultural accidents.  Every  effort  is  made  to  exclude  claims  for  non- 
occupational  accidents,  and  the  strict  control  and  prompt  investigation  by 
the  local  committees  tends  effectively  towards  this  end. 

Employers  have  the  option  of  insuring  members  of  their  own 
household  against  risks  or  not  as  they  desire.  All  but  five  per  cent 
prefer  to  have  their  families  covered  by  the  insurance. 


SWITZERLAND. 


THE    RECENT    LEGISLATION    REGARDING    WORKMEN'S    ACCI 
DENT  AND  SICKNESS  INSURANCE. 


Good  and  Weak  Points  of  the  Measure — Peculiar  and  Novel  Features 

and  Reasons  Therefor — The  Sickness  Insurance  Law — 

The  Accident  Insurance  Law. 

Switzerland  enjoys  the  distinction  of  being  one  of  the  first  coun- 
tries to  do  away  with  the  theory  of  employers'  liability  for  accidents 
to  employees  for  negligence  only.  In  1875  transportation  companies 
were  made  liable  for  all  accidents  to  employees,  except  in  case  of  willful 
neglect  or  "Act  of  God";  and  from  1877  on  the  same  principle  was 
gradually  extended  to  apply  to  work  in  factories  and  in  building,  min- 
ing and  contracting  and  to  other  industrial  pursuits.  Instead  of  re- 
maining content  with  this  form  of  legislation,  however,  the  National 
Council  in  1890  submitted  to  the  voters  an  amendment  to  the  Federal 
constitution  allowing  the  introduction  of  an  obligatory  system  of  insur- 
ance against  sickness  and  accidents.  This  amendment  was  ratified  on 
October  12th  of  the  same  year  by  the  overwhelming  vote  of  283,228  for 
and  only  92,200  against.  Although  the  authorities  immediately  began  to 
work  out  the  details  of  a  new  scheme  of  insurance,  the  same,  known  as 
the  Lex  Forrer,  was  not  completed  until  1898,  and  only  adopted  by  the 
National  Assembly  on  October  5th,  1899.  Its  leading  features  were  the 
compulsory  insurance  of  workingmen  against  sickness  and  accidents; 
and  all  classes — workmen,  artisans,  agricultural  laborers  and  small 
trades-people — were  made  subject  to  its  provisions.  Unlike  the  German 
compensation  laws,  wherein  the  limit  is  $500,  the  Forrer  Act  applied 
to  all  those  earning  up  to  a  thousand  dollars  a  year.  Accident  insur- 
ance was  to  be  placed  with  a  state  institution,  which  was  to  have  a 
monopoly  of  this  branch  of  the  insurance  business.  The  State  was  to 
bear  one-fifth  of  the  cost  of  accident  insurance  and  to  contribute  a 
certain  amount  for  each  person  insured  against  sickness,  which  con- 
tributions together  would  have  entailed  an  estimated  cost  of  eight  mil- 
lion francs.  Arrangements  were  made  for  the  establishment  of  gov- 
ernment sickness  insurance  societies,  which  would  have  competed  with 
the  existing  private  societies.  That  act  contained  over  200  para- 
graphs, and  its  provisions  and  administrative  details  were  complicated 
and  involved. 

No  sooner  was  the  Lex  Forrer  enacted  than  a  storm  of  opposition 
arose.  The  existing  private  sickness  insurance  societies,  with  their 
influential  followings,  objected  to  the  organization  and  competition  of 
the  public  sickness  insurance  societies  therein  provided  for.  The  agri- 

63 


cultural  interests  claimed  that  the  compulsory  insurance  of  laborers  in 
their  industry  would  impose  altogether  too  heavy  a  burden.  And  the 
industrial  classes  were  opposed  to  the  idea  of  a  government  monopoly 
of  accident  insurance.  A  referendum  having  been  demanded  by  117,461 
voters,  the  Lex  Forrer  was  submitted  to  a  popular  vote  on  May  20th, 
1900,  and  rejected  by  a  vote  of  341,914  against  and  148,035  for. 

Disheartened  by  this  rejection,  the  Federal  Council  did  not  present 
another  bill  affecting  workingmen's  insurance  until  December  10th, 
1906.  In  its  draft  of  a  new  measure,  the  Council  was  actuated  not  so 
much  by  a  desire  to  frame  a  perfect  statute  as  by  a  wish  to  submit 
a  measure  that  would  receive  the  approval  of  the  majority  of  the  voters. 
That  motive  should  be  borne  in  mind  in  any  study  of  this  law.  The  bill 
was  debated  at  great  length,  and  was  not  finally  adopted  by  the  National 
Assembly  until  June  13th,  1911.  Like  its  predecessor,  the  Lex  Forrer,  it 
aroused  great  opposition;  but  this  time  the  objections  came  mainly 
from  the  employer  class.  With  difficulty  75,930  citizens  were  found 
who  demanded  the  usual  referendum.  On  February  4th,  1912,  the  elec- 
tion took  place,  preceded  by  a  bitter  contest,  and  the  law  was  finally 
approved  by  a  vote  of  287,585  ayes  against  241,416  noes,  or  by  a 
majority  of  46,149.  Eight  only  of  the  25  cantons  rejected  the  measure, 
the  most  important  of  them  being  the  French  speaking  cantons,  where 
the  monopolistic  features  of  the  new  law  were  strongly  disliked  for 
interfering  too  much  with  the  freedom  of  the  individual.  On  the  other 
hand,  owing  to  the  support  of  the  laboring  class,  the  cantons  contain- 
ing the  important  manufacturies  and  industrial  workshops  approved  of 
the  act,  as  did  also  those  cantons  wherein  the  agricultural  interests 
predominated.  The  authorities  are  now  busily  engaged  in  preparing  the 
necessary  organization  to  put  the  new  law  into  effect.  That  part  relat- 
ing to  sickness  insurance  is  expected  to  go  into  operation  in  1914,  and 
that  relating  to  accidents  not  later  than  January  1st,  1916. 

The  Sickness  Insurance  Law.* 

While  the  provisions  of  the  new  law  relating  to  accidents  aroused 
great  antagonism,  those  relating  to  sickness  insurance  met  with  com- 
paratively little  opposition  or  criticism.  It  has  been  generally  regarded 
as  a  step  in  the  right  direction,  though  many  persons  are  of  the  opinion 
that  it  does  not  go  far  enough. 

Before  taking  up  this  new  statute,  a  brief  survey  of  the  existing 
system  of  voluntary  sickness  insurance  is  in  place.  That  system  has 
grown  rapidly,  as  the  following  figures  will  show: 

Year.  No.  societies.  Total  membership. 

1865 632  96,000 

1890 1,085  209,920 

1903 2,006  505,947 


*Title  I  of  Federal  Law  of  June  13,  1911. 

64 


Out  of  every  100  inhabitants,  18  are  insured  against  sickness  in  Ger- 
many, 13  in  Switzerland,  10  in  Austria  and  7  in  France.  Next  to  Ger- 
many, therefore,  where  such  insurance  is  compulsory,  Switzerland  oc- 
cupies the  post  of  honor. 

But,  while  the  figures  just  given  make  a  gratifying  showing,  every- 
one familiar  with  conditions  in  Switzerland  admits  that  there  is  a  cry- 
ing need  for  increasing  the  scope  and  efficiency  of  the  present  system 
of  sickness  insurance.  In  1903  it  covered  only  30%  of  the  male  adult 
population  and  7%  of  the  women, — only  29%  of  the  men  and  21%  of 
the  women  factory  hands  being  insured.  Hardly  any  children  are  in- 
sured; and  many  perish  annually  because  the  parents  are  unable  to  pay 
for  proper  medical  attention.  In  the  remote  mountain  districts  physi- 
cians are  not  to  be  had — in  the  Canton  Wallis  over  half  of  those  who 
die  are  without  medical  attendance.  In  one  extreme  case  39  out  of 
the  42  deaths  occurring  in  one  community  during  a  given  period  took 
place  without  a  doctor  being  available,  even  to  sign  the  death  certifi- 
cate. These  are  grave  evils  which  everyone  admits  should  be  remedied 
as  soon  as  possible. 

On  the  part  of  many  of  the  largest  employers  of  labor,  the  govern- 
ment was  urged  to  introduce  a  system  of  obligatory  sickness  insur- 
ance. Where  voluntary  insurance  prevails,  the  younger  workmen  neglect 
to  join,  and,  handicapped  by  too  large  a  percentage  of  older  and  less 
healthy  members,  the  societies  are  often  unable  to  fulfill  their  obliga- 
tions. To  this  fact  is  ascribed  the  failure  of  31%  of  all  the  Swiss  sick- 
ness insurance  societies  during  the  period  1880-1903.  In  the  various 
trades  and  occupations  wherein  the  employer  is  now  made  responsible 
for  all  accidents,  only  one-half  of  all  the  workmen  are  insured  against 
sickness.  As  only  a  limited  number  are  injured  in  accidents,  whereas 
all  laborers  sooner  or  later  meet  with  sickness,  compulsory  sickness  in- 
surance forms  the  foundation  for  any  universal  and  satisfactory  sys- 
tem of  social  insurance. 

However  sound  these  arguments,  the  authorities  felt  that  the  decisive 
vote  by  which  the  Lex  Forrer  was  rejected  proved  conclusively  that  the 
Swiss  people  did  not  desire  as  yet  the  introduction  of  a  system  of 
compulsory  sickness  insurance.  As  the  next  best  thing  therefore,  the 
government  decided  on  the  plan  followed  in  Sweden,  Denmark  and  Bel- 
gium of  encouraging  the  growth  and  extension  of  voluntary  sickness 
societies  by  a  system  of  subsidies.  But,  in  order  to  expedite  introduc- 
tion of  compulsory  sickness  insurance,  permission  is  granted  in  the  new 
law  to  the  individual  cantons  and  communes  to  declare  sickness  insur- 
ance compulsory,  either  for  all  or  for  certain  categories  only,  of  work- 
men, such  as  the  more  poorly  paid.  If  a  canton  makes  such  insurance 
obligatory  and  defrays  part  of  the  expenses,  the  Federal  government 
agrees  to  contribute  an  amount  equal  to  one-third  of  the  total  outlay  by 
the  canton.  It  is  impossible  to  say  as  yet  whether  any  of  the  communes 
or  cantons  will  avail  themselves  of  this  right. 

Under  the  new  law  all  existing  Swiss  sickness  societies — irrespective 
of  religious,  political  or  other  entrance  requirements  for  members — 

65 


may  become  approved  or  recognized  societies  and  thereby  entitled  to 
government  aid.  They  must  not  be  run  for  profit,  must  show  their 
financial  responsibility,  must  be  open  to  both  sexes  and  must  receive 
Swiss  on  as  favorable  terms  as  members  of  any  other  nationality.  Their 
rules  and  regulations,  as  well  as  all  proposed  changes,  must  first  be 
approved  by  the  government  authorities.  The  societies  must  agree  to 
receive  members  of  a  year's  standing  coming  from  other  societies,  who 
desire  to  transfer  their  membership  on  account  of  removal,  change  of 
occupation  or  dissolution  of  the  original  society.  To  obtain  govern- 
ment aid,  the  societies  must  either  furnish  medical  attendance  and 
medicines  or  pay  their  members  a  sickness  benefit  of  at  least  one  franc 
a  day.  As  a  preventive  of  simulation,  children  under  14  years  of  age 
cannot  be  insured  in  societies  which  give  sickness  benefits.  For  the 
same  reason,  the  sickness  benefit  is  payable  only  from  the  third  day  of 
illness,  whereas  medical  treatment  must  be  given  from  the  first  day. 
As  the  period  of  disability  is  apt  to  be  less  where  the  ailing  member  has 
to  shoulder  a  part  of  the  cost  of  medical  treatment,  the  societies  are 
obliged  to  bear  only  three-fourths  of  such  cost  where  the  time  of  treat- 
ment in  any  given  twelve  months  aggregates  270  days  or  more.  But 
the  societies  are  required,  if  they  so  elect,  to  give  members  only  180 
days  of  treatment  in  the  course  of  one  year. 

Besides  the  matters  just  mentioned,  the  societies  must  undertake 
to  treat  for  the  account  of  the  accident  funds  all  accident  cases  for  the 
first  six  weeks  of  disability,  subject  to  reimbursement  and  appropriate 
remuneration.  In  addition,  they  must  forego  the  right  of  selecting 
physicians  as  heretofore,  and  must  accept  the  services  of  any  doctor, 
chosen  by  any  ailing  member,  who  resides  in  the  locality,  and  who  is 
willing  to  serve  at  the  rate  of  compensation  prescribed  by  the  govern- 
ment. 

Up  to  the  present  time,  women  have  had  comparatively  little  oppor- 
tunity of  insuring  themselves  against  sickness.  Of  the  sickness  societies 
existing  in  1903,  58%  accepted  men  only  as  members,  for  the  reason 
that  women  are  a  more  dangerous  risk.  Although  not  so  frequently 
ill,  they  are  apt  to  be  longer  sick  than  in  the  case  of  the  other  sex,  and 
there  has  been  a  decided  prejudice  against  admitting  them  as  members 
of  sickness  societies.  In  prescribing,  therefore,  that  no  woman  may 
hereafter  be  excluded  on  account  of  her  sex  from  any  recognized  society 
the  new  law  makes  a  great  step  forward.  Nor  can  she  be  required  to 
pay  any  higher  dues  than  a  man — she  is  put  on  a  plane  of  equality. 

Although  the  same  disability  results  as  in  the  case  of  an  ordinary 
illness,  only  a  few  of  the  Swiss  sickness  societies  have  furnished  sick 
benefits  or  medical  treatment  in  the  event  of  childbirth.  Hereafter, 
however,  the  accepted  sickness  societies  are  obliged  to  treat  all  such 
cases  as  though  they  were  ordinary  illnesses,  and  must  give  assistance 
or  treatment  for  a  minimum  period  of  six  weeks.  And  as  experience  has 
shown  that  children  have  a  much  better  chance  of  surviving  if  nursed 
by  their  mothers  for  the  first  few  months  of  their  existence,  the  so- 
cieties are  obliged  to  pay  all  mothers  who  nurse  their  children  for  a 

66 


period  of  at  least  ten  weeks  from  time  of  birth  a  special  grant  of 
twenty  francs.  In  this  way  it  is  hoped  to  do  much  in  the  way  of  dimin- 
ishing the  rate  of  infant  mortality.  If  300,000  women  are  insured  in 
the  approved  sickness  societies,  which  is  the  number  the  authorities 
have  calculated  upon,  18,000  cases  of  childbirth  are  expected  to  occur 
among  them  each  year. 

Whenever  a  sickness  society  shall  have  fulfilled  the  necessary  re- 
quirements, it  becomes  entitled  to  an  annual  subsidy  or  contribution 
from  the  central  government,  based  on  its  membership.  The  amount  of 
this  contribution  varies.  For  children  in  all  cases  S1/^  francs,  and  the 
same  amount  for  the  male  members  of  such  societies  as  pay  either 
benefits  of  at  least  1  franc  a  day  or  furnish  medical  attendance.  In 
the  case  of  women  members,  4  francs  is  contributed,  because  their  ratio 
of  risk  is  higher.  Societies  supplying  both  benefits  and  treatment  are 
to  receive  5  francs  a  member,  the  sexes  being  treated  alike,  and  50  cen- 
times extra  is  paid  in  all  cases  where  in  the  course  of  540  days,  360 
days  of  treatment  are  allowed.  Twenty  francs  is  allowed  for  every  case 
of  childbirth,  and  the  same  sum  in  addition  for  each  newly  born  child 
nursed  by  its  mother  for  a  period  of  ten  weeks.  But  the  sum  total  of 
the  government's  contribution  in  any  given  year  is  not  to  exceed  two- 
thirds  of  the  gross  amount  realized  from  members'  dues,  gifts  and 
other  sources.  And  where  cantons  or  communes  have  made  sickness 
insurance  obligatory — either  for  all  or  for  only  certain  portions  of  the 
laboring  population — and  have  assumed  the  payment  of  the  dues  of 
members,  either  in  whole  or  in  part,  the  Federal  government  is  to 
contribute  one-third  of  any  amount  thus  expended. 

Specially  favored  treatment  is  accorded  the  remote  and  thinly 
populated  mountain  districts,  with  limited  means  of  communication.  Here 
the  total  of  the  Government's  contribution  may  reach  7  francs  per  mem- 
ber per  year;  and  it  may  also  make  a  special  grant  of  3  francs  per  head 
to  the  cantons  or  communes  in  order  to  reduce  the  cost  of  treating  sick 
persons. 

In  1903  there  were  505,947  persons  insured  in  the  various  private 
sickness  societies.  After  the  new  law  has  gone  into  full  effect,  the  of- 
ficials count  on  a  membership  of  800,000  in  accepted  sickness  societies 
entitled  to  benefits  under  the  act; — 660,000  in  voluntary  societies  and 
140,000  in  societies  in  cantons  and  communes  wherein  sickness  insurance 
shall  have  been  made  obligatory.  The  Government's  sickness  insurance 
budget  is  therefore  estimated  in  detail  as  follows: 

Voluntary  Insurance  Societies. 

100,000  children,  at  fr.  3%   fr.  350,00« 

255,000  men,  at  fr.  3%    "  892,500 

70,000  women,  at  f r.  4  "  280,000 

235,000  men  and  women,  at  f  r.  5 "  1,175,000 

400,000  extra  treatment,  at  fr.  0.50  "  200,000 


14,000  births,  at  f r.  20   "        280,000 

4,700  nursing  mothers,  at  f  r.  20   "          94,000 


Total       fr.  3,271,500 

Compulsory  Insurance  Societies. 

140,000  members,  at  fr.  4  (contributions  to  cantons)    fr.  560,000 

35,000  members  at  fr.  2  (cantons  assuming  dues  of  needy 

persons)    "  70,000 

2,800  births,  at  fr.  20   "  56,000 

700  nursing  mothers,  at  fr.  20  "  18,000 


Total      fr.        704,000 

For  societies  in  mountainous  districts "        500,000 


Grand    total    fr.     4,475,500 

Based  on  the  figures  expended  by  the  societies  in  1903,  the  cost 
of  providing  800,000  persons  with  benefits  and  treatment  in  sickness 
would  be  about  seventeen  million  francs.  The  Government's  contribu- 
tion, therefore,  will  be  slightly  more  than  one-fourth  of  the  total  amount 
required — certainly  a  very  generous  proportion.  An  enrollment  of  800,- 
000  would  mean  that  about  21%  of  the  total  population  would  be  pro- 
tected by  sickness  insurance,  which  percentage  is  about  the  same  as 
that  in  Germany. 

But  will  the  existing  societies  accept  the  Government  requirements  ? 
As  we  have  seen,  the  new  law  has  many  good  points.  It  does  away 
with  all  discrimination  against  women  and  enables  them  to  obtain  in- 
surance on  the  same  terms  as  men.  Medical  assistance  is  granted  them 
in  case  of  childbirth.  A  very  important  provision  is  that  allowing  the 
transfer  of  membership  from  one  society  to  another  where  a  laborer 
changes  his  place  of  occupation,  for  100,000  such  transfers  are  said  to 
occur  annually  in  Switzerland.  The  way  is  left  open  for  the  gradual 
introduction  by  the  individual  cantons  of  compulsory  sickness  insurance 
for  all  classes,  while  especial  care  has  been  bestowed  on  the  formation 
of  sickness  insurance  societies  in  the  remote  mountain  districts.  The 
widespread  and  successful  application  of  this  law  depends,  however, 
largely  on  the  extent  to  which  societies  can  be  found  to  conform  to 
the  Government  requirements,  so  as  to  become  entitled  to  the  Federal 
subsidies.  As  far  as  the  existing  societies  are  concerned,  there  are 
several  provisions  in  the  law  which  may  cause  a  number  of  them  to 
hesitate  about  accepting  its  terms. 

In  the  first  place,  the  societies  must  give  up  their  independence 
of  action  and  subject  themselves  to  Government  inspection  and  regula- 
tion. Many  of  them  are  supported  to  a  considerable  degree  by  con- 
tributions from  employers,  etc.,  which  will  be  lost  in  the  event  of 

68 


change  to  accepted  Government  organizations.  No  longer  will  they  be 
able  to  keep  down  medical  costs  and  to  guard  against  simulation  by 
having  members  treated  by  trustworthy  physicians  of  their  own  selec- 
tion. Lastly,  which  is  the  most  serious  objection,  they  may  get  into 
grave  financial  difficulties  by  being  obliged  to  treat  for  the  state  insti- 
tution all  accident  cases  for  the  first  six  weeks  of  disability,  and  to 
advance  the  compensation  therefor  at  the  rate  of  80%  of  wages,  instead 
of  about  one  franc  a  day,  as  in  the  case  of  sickness.  The  Government 
agrees,  of  course,  to  reimburse  the  societies  according  to  a  fixed  tariff 
for  the  handling  of  such  accident  cases;  but  whether  that  tariff  will 
suffice  to  cover  the  additional  outlays  made  in  this  connection  remains 
to  be  seen. 

It  should  be  noted,  however,  that  under  the  law  any  accepted  so- 
ciety can  cease  to  act  as  such  by  giving  three  months'  notice  of  such 
intention.  In  view  of  this  provision,  it  is  safe  to  assume  that  the  ma- 
jority of  the  existing  sickness  societies  will  elect  at  the  outset  to  be- 
come accepted  Government  institutions.  Later  on,  if  they  find  the 
burdens  and  annoyances  of  acting  as  such  to  be  too  heavy,  doubtless 
a  number  of  them  will  take  advantage  of  this  loophole  in  the  law  and 
give  notice  of  their  desire  to  resume  their  former  voluntary,  uncontrolled 
and  unassisted  form.  To  what  extent  such  withdrawals  will  take  place 
it  would  be  futile  to  speculate  in  advance. 

The  Accident  Insurance  Law.* 

The  new  law  establishes  a  National  Swiss  Accident  Insurance  De- 
partment, with  headquarters  at  Lucerne  and  individual  agencies  i[n 
each  canton,  governed!  by  an  administrative  council  of  40  members 
appointed  by  the  Federal  Council  for  a  term  of  six  years.  Twelve  of 
them  are  to  be  representatives  of  the  compulsorily  insured  employees 
and  sixteen  of  the  same  class  of  employers,  four  are  to  be  named  as 
representatives  of  the  voluntarily  insured  and  eight  as  representatives 
of  the  Government.  The  active  management  is  to  be  in  the  hands  of  a 
board  of  managers  nominated  by  the  Administrative  Council,  but  elected 
by  the  members  of  the  Federal  Assembly,  who  are  not  bound,  however, 
to  follow  the  recommendations  of  the  Administrative  Council. 

Four  branches  of  insurance  are  to  be  undertaken  by  the  National 
Insurance  Department.  First,  compulsory  occupational  accident  insur- 
ance affecting  all  workmen  employed  in  Switzerland  in  the  following  oc- 
cupations: Railway  and  steamboat  services;  postoffice  employees;  those 
engaged  in  factories  subject  to  the  provisions  of  the  law  of  March  23, 
1877;  in  the  building  trades;  transportation  by  land  or  water;  the  erec- 
tion and  repairing  of  telephone  and  telegraph  lines  and  machinery;  in- 
stallations of  a  technical  nature;  general  contracting,  tunnelling,  mining, 

*Title  II  of  Federal  Law  of  June  13,  1911. 

fThis  body  is  really  more  advisory  than  governmental;  see  infra. 

69 


quarrying,  and  the  building  of  streets,  bridges,  waterworks  and  sewers. 
The  premiums  for  this  insurance  have  to  be  paid  by  the  employers. 

Second  in  the  list  is  a  decided  innovation,  namely,  compulsory  in- 
surance in  the  trades  and  occupations  just  enumerated  against  non-occu- 
pational accidents  or  such  as  occur  outside  of  working  hours.  Here 
one-fourth  of  the  premium  is  charged  to  the  Federal  Government  and 
the  other  three-fourths  to  the  employee.  The  employer  is  to  advance  the 
workman's  share  of  such  premium,  and  may  deduct  the  amount  of  the 
same  from  his  wages. 

A  third  category  covers  voluntary  insurance  up  to  3,000  francs, 
against  accidents  to  persons  not  included  among  the  obligatorily  insured, 
residing  in  Switzerland  and  over  14  years  of  age.  One-eighth  of  the 
premium  required  in  such  cases  is  to  be  advanced  by  the  Government. 

Lastly  comes  the  voluntary  insurance  of  employers  against  liability 
for  injuries  to  outside  or  third  persons. 

In  these  two  last  branches,  the  Government  institution  will  be  ex- 
posed to  the  competition  of  the  private  insurance  companies,  but  on 
equal  terms  only  in  the  last  class,  for  in  the  field  of  voluntary  self- 
insurance  the  private  companies  will  be  badly  handicapped  and  will  be 
at  a  great  disadvantage  through  the  Federal  Government's  donation  of 
one-eighth  of  the  required  premium. 

Besides  endowing  the  department  with  a  working  capital  of  five 
million  francs*  and  a  reserve  fund  of  the  same  amount,  the  Govern- 
ment is  to  pay  one-half  of  all  the  administrative  costs  of  the  central 
institution  and  to  allow  it  the  free  use  of  the  mails  and  exemption  from 
all  taxation  except  on  real  property  not  made  use  of  in  its  insurance 
business.  A  certain  part  of  the  premiums  are  to  be  set  aside  in  each 
of  the  four  projected  branches  of  insurance  as  a  reserve  until  such 
time  as  the  fund  shall  equal  one-half  of  the  average  premium  receipts 
plus  the  Government  subsidy  received  by  the  institution  during  the  last 
preceding  five  years. 

The  authorities  are  empowered  to  compel  the  societies  subsidized  by 
the  Government  under  the  sickness  insurance  law  to  treat  all  accident 
cases  for  the  State  institution's  account  for  a  maximum  period  of  six 
weeks.  Only  from  five  to  ten  per  cent  of  all  injuries  caused  by  acci- 
dents remain  unhealed  or  uncured  at  the  end  of  that  period;  and  spe- 
cial arrangements  will  have  to  be  made  for  those  cases. 

Compensation  under  the  new  law  is  to  be  granted  on  a  liberal  scale. 
Besides  free  medical  treatment,  the  injured  party  is  entitled,  from  the 
third  day  on,  to  80%  of  the  wages  earned  by  him  before  the  accident. 
In  every  case,  14  francs  is  taken  as  the  maximum  daily  wage — any- 
thing in  excess  of  that  figure  is  disregarded.  If  permanent  disability 
ensues,  70%  of  his  customary  wages  is  to  be  paid,  but  4,000  francs  is 
to  be  considered  the  maximum  salary  in  calculating  the  rate.  If  only 
partial  permanent  disability  ensues,  the  amount  is  reduced  in  propor- 

*This  donation  to  the  working  capital,  however,  is  simply  an  advance 
to  be  repaid. 

70 


tion  to  the  extent  of  the  injury  received.  In  case  of  death,  a  funeral 
benefit  of  40  francs  is  provided  for,  and  the  widow  is  to  receive  during 
her  widowhood  an  annuity  equal  to  30%  of  her  husband's  yearly  wages. 
Children  each  receive  15%  until  they  are  16;  if  orphans,  25%.  If  a 
child  is  permanently  incapacitated  at  the  age  of  16,  the  annuity  does  not 
cease,  but  runs  until  the  70th  year.  Ascendants  receive  for  life,  and 
brothers  and  sisters  up  to  the  age  of  16,  an  annuity  equal  to  20%  of 
the  annual  wage.  But  in  no  case  of  survivorship  is  more  than  60% 
paid — if  an  excess  results,  the  annuities  are  scaled  down,  each  propor- 
tionally, to  60%.  The  widow  and  children  are  preferred  for  the 
amounts  due  them,  but  if  they  aggregate  less  than  60%  the  ascendants 
and  collateral  heirs  receive  the  difference.  Where  the  annuity  to  sur- 
vivors, or  that  granted  to  the  victim  for  permanent  partial  disability,  is 
less  than  10  francs  a  month,  the  State  institution  has  the  right  to  com- 
pound it  by  the  payment  of  a  lump  sum. 

Foreigners,  (of  whom  200,000  are  estimated  to  be  working  in 
Switzerland),  receive  only  %  of  the  benefits  accorded  to  natives,  unless 
their  home  country  grants  to  Swiss*  citizens  equally  as  high  a  com- 
pensation in  case  of  accident  or  sickness,  as  is  to  be  provided  by  the 
Swiss  law. 

Under  the  present  employers'  liability  system,  an  injured  workman, 
if  only  temporarily  disabled,  is  entitled  to  recover  the  full  amount  of 
wages  lost  by  him.  In  granting  only  80%  of  the  daily  wage  earned 
in  such  cases,  the  new  law  operates  to  the  disadvantage  of  the  em- 
ployee. In  case  of  death  or  permanent  disability,  however,  he  will 
receive  a  much  higher  rate  of  compensation  than  now.  Instead  of  a 
maximum  recovery  of  6,000  francs,  the  amount  to  be  awarded  is  an 
annuity  equal  to  60%  to  70%  respectively  of  his  former  wages,  up 
to  4,000  francs  annually.  6,000  francs  capitalized  at  4%  will  yield 
an  income  of  only  240  francs  a  year,  which  is  the  highest  amount  an 
employee  can  now  recover.  But  hereafter,  the  average  yearly  annuity 
paid  will  vary  between  60%  and  70%  of  1,200  francs  (the  average 
yearly  wage),  i.  e.,  will  be  between  720  and  840  francs.  Thus  a  per- 
manently disabled  workman  will  be  three  times  better  off  than  under 
the  present  system. 

According  to  the  calculation  of  the  authorities,  700,000  persons 
are  counted  upon  to  become  insured  against  accidents.  This  number 
is  made  up  as  follows: 

51,000  Railway  and  steamboat  employees. 

377,000  Employees  covered  by  present  employers'  liability  insurance. 
122,000  Employees  additional  in  compulsorily  insured  list. 
150,000  Employees  voluntarily  insured     . 

700,000  Total  number. 


At  an  arerage  wage  of  1,200  francs,  this  would  make  a   total    pay 

r 

71 


roll  of  840  million  francs.     The  premium  rate  is  figured  as  follows: 

For  occupational   accidents    2.75 

For  non-occupational  accidents    55 

For  administration  expenses   33 

Total     3.63 

Based  on  the  premium  rate  and  total  pay  roll  just  mentioned,  the 
cost  of  this  new  insurance  will  amount  to  30,492,000  francs.  This  is  to 
be  divided  as  follows: 

Per  cent, 
of  Wages. 

Employers,      19,008,000  francs 2.26 

Employees,        8,320,500  francs 99 

Government,      3,163,500  francs 38 

The  employers  have  to  bear  the  entire  cost  of  insurance  against 
ordinary  occupational  accidents,  less  the  Government's  contribution  to- 
wards the  estimated  administrative  expenses.  The  employee's  share 
is  divided  as  follows: 

Francs. 
%  cost  of  non-occupational  accidents  of  the  com- 

pulsorily   insured    2,871,000 

%  cost  of   occupational   accidents   of   the   volun- 
tarily insured    4,539,500 

%  cost   of   non-occupational    accidents    of   volun- 
tarily insured    910,000 


Total      8,320,500 

The  Government's  contribution  is  apportioned  as  follows: 

Francs 

^4  cost  of  non-occupational  accidents  of  the  com- 

pulsorily  insured  957,000 

%  cost  of  occupational  accidents  of  voluntar- 
ily insured  648,500 

%  cost  of  non-occupational  accidents  of  volun- 
tarily insured  130,000 

%  cost  of  administration  expenses   1,428,000 


Total      3,163,500 

To  this  should  be  added  the  cost  of  the  special  insurance  tribu- 
nals, viz:  161,000  francs,  which  brings  the  Government's  total  esti- 
mated outlay  up  to  3,324,500  francs.  If  to  this  be  added  4,475,500 
francs  to  be  bestowed  on  the  sickness  insurance  department,  the  Swiss 

72 


Government   is   facing   an   anticipated   annual   expenditure   all   told    of 
7,800,000  francs  on  account  of  its  new  insurance  law. 

On  behalf  of  the  new  law  one  can  say  that  it  will  bring  about 
compulsory  accident  insurance  for  one-fourth  more  employees  than 
under  present  conditions.  To  the  severely  injured  workman  it  affords 
a  much  higher  compensation,  given  in  the  form  of  a  permanent 
annuity  instead  of  by  the  payment  of  an  easily  dissipated  lump  sum. 
The  average  rate  of  indemnity  is  higher  than  that  granted  in  any 
other  country.  Even  non-occupational  accidents,  or  those  outside  of 
working  hours,  are  to  be  compulsorily  insured,  something  that  has  never 
yet  been  attempted  in  any  other  country.  Whether  as  many  as 
150,000  will  become  voluntarily  insured,  is  an  open  question.  Even 
though  the  Government  assumes  one-eighth  of  the  total  cost,  the  em- 
ployees, especially  in  the  more  poorly  paid  occupations,  like  agri- 
cultural pursuits,  may  find  it  beyond  their  means  to  pay  the  remain- 
ing seven-eighths  of  the  high  premiums  required. 

As  compared  with  those  in  the  obligatorily  insured  categories,  those 
taking  out  voluntary  insurance  are  at  a  decided  disadvantage.  The 
former  obtain  insurance  against  every  kind  of  accident  and  only  have 
to  defray  %  of  the  premium  for  non-occupational  accidents,  amounting 
to  0.041  2-3  of  the  total  wage  earned.  To  obtain  the  same  protection, 
the  voluntarily  insured  must  pay  the  entire  premium,  less  only  the 
Government's  Vs  share  and  its  contribution  to  the  cost  of  adminis- 
trative expenses.  For  them  the  premium  charge  works  out  over  3% 
of  the  total  yearly  wage.  If  insurance  against  non-occupational  acci- 
dents had  been  left  optional,  one-sixth  of  this  charge  could  have  been 
saved;  and  no  good  reason  exists  why  this  should  not  have  been  done. 
But  the  authorities  preferred  to  have  the  two  classes  of  insurance  go 
together — both  occupational  and  non-occupational  insurance  must  be 
taken  out,  or  the  worker  not  compulsorily  insured  will  get  none  at  all. 

From  nearly  every  point  of  view  the  insurance  of  non-occupational 
accidents  appears  to  have  been  a  mistaken  move.  It  is  right  and  proper 
to  insure  workmen  against  the  consequences  of  accidents  arising  in  the 
course  of  their  employment,  but  to  go  a  step  further  and  to  indemnify 
them  against  injuries  incurred  while  not  working  and  while  under  no 
professional  risk  is  to  put  them  in  a  favored  class  as  compared  with  the 
rest  of  the  population.  As  no  other  country — except  Sweden,  where  the 
Government  furnishes  such  insurance  but  only  on  a  voluntary  basis — 
has  attempted  to  insure  such  risks,  no  reliable  statistics  are  available 
as  to  the  cost.  Its  financial  consequences  are  therefore  altogether  un- 
certain. If,  in  spite  of  unremitting  watchfulness,  simulation  is  constantly 
on  the  increase  in  occupational  accidents  to  workingmen,  how  are  such 
fraudulent  practices  to  be  checked  or  controlled  where  injuries  are  re- 
ported to  have  occurred  away  from  all  oversight  or  witnesses  ?  Will 
not,  therefore,  the  estimate  of  13%  of  all  accidents  be  greatly  ex- 
ceeded? The  experience  of  the  Swiss  insurance  company,  The  Helvetia, 
need  only  be  recalled,  which  company  undertook  such  insurance,  but 
was  speedily  obliged  to  give  it  up  on  account  of  the  losses  entailed  due 

73 


to  artificially  inflicted  or  simulated  injuries.  The  workmen  of  Italian 
nationality  were  especially  noted  for  self-made  wounds,  produced  by 
acids  and  corrosives. 

Another  interesting  problem  is  whether  the  employers  will  not 
sooner  or  later  assume  the  employees'  quota  of  the  premiums  for  non- 
occupational  accidents,  in  which  event  all  check  upon  simulation  from  the 
employees'  self-interest  will  be  lost.  That  this  will  come  to  pass  is  pre- 
dicted by  many  in  touch  with  the  situation.  By  the  terms  of  the  law,  the 
employer  is  obliged  to  remit  to  the  Federal  insurance  department  the 
portion  of  the  premiums  due  from  his  employees  for  non-occupational  ac- 
cident insurance.  Where  an  employee  is  earning  merely  a  minimum  liv- 
ing wage  he  cannot  shoulder  this  amount,  small  though  it  be,  and  it 
must  perforce  be  borne  by  his  employer.  In  the  larger  and  more  pros- 
perous establishments,  the  employers  will  do  this  for  all  classes  of  em- 
ployees rather  than  be  bothered  with  the  annoyance  of  having  to  keep  a 
complicated  set  of  books  and  of  deducting  the  small  sum  of  a  few  cents 
a  week  from  the  wages  of  each  workman.  And  in  time  the  smaller  em- 
ployers may  follow  suit. 

As  is  no  secret,  undesirable  concessions  and  unnatural  compromises 
were  made  in  order  to  secure  the  passage  of  the  accident  insurance  law. 
To  this  circumstance  is  due  the  insertion  and  retention  of  the  provision 
for  the  insurance  of  non-occupational  accidents.  The  Lex  Forrer,  so 
overwhelmingly  rejected  in  1900,  contained  a  like  provision,  advocated 
on  the  ground  of  the  difficulty  in  distinguishing  between  these  and  the 
usual  run  of  occupational  accidents.  On  its  being  shown  that  in  the 
case  of  280,000  accidents  settled  by  the  three  leading  Swiss  employers' 
liability  insurance  companies,  only  16  lawsuits  arose  to  determine  the 
category  in  which  the  accident  belonged,  the  retention  of  the  non-occu- 
pational accident  clause  was  then  urged  on  the  ground  that  for  the  in- 
jured workman  the  consequences  of  an  accident  incurred  outside  of 
working  hours  were  just  as  disastrous  as  in  the  case  of  one  received 
in  the  course  of  his  employment.  That  is  doubtless  true.  But  why 
should  the  State  be  called  upon  to  help  protect  a  certain  class  of 
its  population  only  at  the  expense  of  the  rest  against  the  results  of  ac- 
cidents incurred  through  causes  common  to  all  classes,  and  in  no  way 
due  to  the  risks  of  their  employment? 

Besides  its  unfairness  to  the  remainder  of  the  community,  the  in- 
clusion of  the  non-occupational  accident  clause  is  responsible  for  the 
rise  of  14%  in  the  estimated  cost  of  the  new  law  as  compared  with  the 
acts  heretofore  in  force.  If  that  clause  had  been  omitted  the  employers 
would  have  been  able  to  shoulder  the  entire  cost  and  no  contribution 
from  the  workmen  would  have  been  necessary.  The  Federal  Govern- 
ment would  have  been  relieved  from  the  burden  of  granting  subsidies  to 
carry  out  its  scheme  of  accident  insurance,  which  nearly  every  other 
nation  that  has  legislated  on  the  subject  has  thus  far  succeeded  in 
avoiding.  The  money  thus  saved  might  have  been  used  in  starting  a 
system  of  old  age  insurance.  In  spite  of  all  these  possibilities,  the  Na- 
tional Assembly,  influenced  by  political  considerations,  resolutely  stuck 

74 


to  its  determination  to  include  non-occupational  accidents  within  the 
scope  of  the  law.  Otherwise  the  influential  Socialist  party  threatened 
that  they  would  vote  against  the  measure;  and  it  was  realized  that  with- 
out its  support  the  act  could  not  obtain  the  support  of  a  majority  of  the 
electorate.  It  should  also  be  noted  that  the  Government's  being  obliged, 
owing  to  the  inclusion  of  non-occupational  accidents,  to  grant  subsidies 
for  accident  insurance,  was  one  of  the  principal  reasons  urged  for  intro- 
ducing a  State  monopoly  of  accident  insurance. 

Another  section  of  the  law  which  has  been  much  criticised  is  that 
relating  to  the  compensation  of  foreigners.  Its  wording  is  unfortunate 
in  providing  that  foreigners  are  only  to  receive  three-fourths  of  the 
usual  compensation,  except  those  from  countries  wherein  Swiss  are  paid 
as  high  an  indemnity  as  they  would  have  received  if  injured  at  home. 
But  such  a  case  is  never  likely  to  occur,  inasmuch  as  the  Swiss  law 
grants  a  much  higher  rate  of  compensation  than  that  afforded  by  any 
other  country — 25%  more  than  Germany,  which  is  the  next  highest.  If 
the  section  had  read  that  foreigners,  whose  countries  indemnified  work- 
men of  Swiss  nationality  as  liberally  as  native  citizens,  should  receive 
full  instead  of  three-quarters  compensation,  other  nations  would  have 
been  under  some  incentive  to  treat  injured  Swiss  laborers  as  liberally 
as  their  own  subjects.  To  make  full  compensation  to  foreigners  em- 
ployed in  Switzerland  dependent  on  other  countries  raising  their  com- 
pensation rates  to  the  high  Swiss  standard,  is  seeking  the  impossible. 
Consequently  this  provision  of  the  law  will  fail  of  its  object  and  will 
accomplish  nothing  towards  doing  away  with  any  existing  discrimina- 
tions against  Swiss  laborers  in  foreign  countries. 

Much  stress  has  been  laid  by  the  advocates  of  the  law  on  the  fact 
that  the  central  government  insurance  establishment  is  to  be  rim  on 
mutual  lines.  In  effect,  it  is  claimed,  the  institution  should  be  likened 
to  a  large  mutual  insurance  company  managed  by  those  directly  inter- 
ested. The  appointment  of  the  members  of  the  governing  board,  how- 
ever, is  vested  in  the  National  Assembly,  and,  with  eight  direct  repre- 
sentatives of  the  Federal  Government  thereon,  the  authorities  are  pretty 
certain  to  control  the  policy  of  the  insurance  department.  Besides,  40 
governors  is  altogether  too  cumbersome  a  board  to  work  efficiently,  and 
the  real  management  and  control  of  policy  will  be  in  the  hands  of  th£ 
directors,  whom  the  National  Assembly  can  select  as  it  chooses.  The 
Government  office  is  expected  to  begin  operations  with  a  staff  of  from 
500  to  600  clerks. 

As  has  been  stated  before,  the  unhappy  insertion  for  vote  getting 
purposes  of  compulsory  insurance  against  non-occupational  accidents, 
with  its  attendant  Government  subsidy,  was  one  of  the  chief  causes  why 
a  State  accident  insurance  department  was  deemed  necessary.  The 
other  reason  urged  for  its  establishment, — that  the  Government  would 
furnish  through  its  central  institution  insurance  most  cheaply  and  satis- 
factorily— does  not  appear  well  founded. 

Even  the  advocates  of  a  Government  system  have  had  to  admit  that 
the  existing  private  agencies — stock  companies,  mutual  societies,  and 

75 


employers'  associations — have  covered  this  field  of  insurance  eco- 
nomically and  given  a  very  satisfactory  service.  The  average  profits  of 
the  17  domestic  and  foreign  stock  companies  directly  insuring  em- 
ployers liability  risks  have  only  equalled  1%  of  the  total  premium  re- 
ceipts— such  insurance  being  given  at  cost  price.  The  largest  and 
strongest  company  of  them  all  (the  Zurich)  showed  for  the  period 
1906-1910  gross  premium  receipts  of  159  million  francs  and  net  profits 
of  12,700,000  francs.  Of  these  only  2,200,000  francs  came  from  surplus 
earnings,  while  10,500,000  francs  were  derived  from  interest  on  th* 
legal  reserves  carried.  In  1910,  the  two  leading  companies  (the  Zurich 
and  the  Winterthur)  showed,  the  former  a  profit  of  218,000  and  the  lat- 
ter a  loss  of  213,000  francs,  after  paying  all  losses  and  administrative 
expenses.  Had  it  not  been  for  the  interest  on  the  large  reserves  ac- 
cumulated of  2,706,000  and  1,803,000  francs,  respectively,  the  companies 
would  not  have  been  able  to  declare  a  dividend.  Claims  are  settled 
quickly  and  satisfactorily  and  with  almost  no  litigation.  Out  of  a 
total  of  103,000  accidents  settled  during  the  course  of  two  years  by  the 
different  Swiss  private  organizations,  only  165  were  taken  into  court, 
or  less  than  two  lawsuits  per  1,000  accidents.  In  contrast  to  this,  one 
need  only  think  of  the  enormous  and  constantly  increasing  mass  of  liti- 
gation in  Germany  and  Austria.  In  Austria  there  is  one  appeal  for 
about  every  three  accidents  entitling  the  injured  to  compensation.  In 
1909  76,352  appeals,  or  18%  of  all  accident  cases,  were  brought  before 
the  German  arbitration  tribunals,  and  25,234  of  these,  or  33%,  were 
further  appealed  to  the  imperial  insurance  office.  On  account  of  the 
excellent  record  made  by  the  Swiss  companies,  it  is  all  the  more  sur- 
prising that  the  National  Assembly  should  have  decided  on  suppressing 
their  activities  in  the  accident  insurance  field.  In  favor  thereof  the 
argument  was  advanced  that,  if  allowed  to  compete,  the  private  com- 
panies would  take  only  the  better  class  of  business,  leaving  the  state 
institution  to  handle  all  the  bad  risks.  Even  if  that  were  so,  it  is  im- 
material, for  the  state  can  charge  what  rates  it  pleases  and  thereby 
recoup  itself  for  any  losses.  As  a  matter  of  fact,  the  Zurich  and  Winter- 
thur companies  formally  offered  to  share  any  and  all  risks  with  the 
state  institution  on  an  equal  basis.  Nevertheless,  the  Swiss  lawmakers, 
perhaps  fearing  that  the  government  institution  could  neither  flourish 
nor  make  headway  unless  it  had  the  field  to  itself,  remained  unmoved 
and  determined  to  do  away  with  all  private  competition. 

Aside  from  the  possible  heavy  cost  of  non-professional  accidents,  it 
remains  to  be  seen  whether  the  intended  government  monopoly  of  work- 
men's accident  insurance  is  going  to  work  reasonably  well  in  practice  or 
prove  a  very  costly  experiment.  State  insurance  has  usually  resulted 
either  in  excessively  high  premium  rates,  with  costs  covered,  or  in  too 
low  premiums,  with  constantly  recurring  deficits. 

That  the  new  government  accident  insurance  department  will  furnish 
insurance  cheaper  or  settle  claims  more  promptly  than  the  private  com- 
panies is  not  to  be  expected.  Whatever  experience  there  is,  points  the 
other  way.  The  history  of  the  government's  military  insurance  depart- 

76 


ment  against  sickness  and  accidents,  where  costs  have  been  rising  by 
leaps  and  bounds  during  its  10-year  existence  and  have  averaged  more 
than  five  times  the  original  amount  estimated,  is  far  from  re-assuring. 
Complaint  is  made  of  the  dilatoriness  and  of  the  disagreeable  haggling 
of  the  government  officials  in  settling  with  victims  of  railway  accidents 
occurring  on  the  lines  owned  by  the  state. 

In  view  of  this,  both  employers  and  employees  may  hereafter  have 
decided  cause  to  regret  in  many  respects  the  suppression  of  the  existing 
system  of  private  competition  and  its  replacement  by  a  bureaucratic 
government  monopoly. 


SWISS  EXPERIENCE  IN  MILITARY  INSURANCE. 


An    Instructive   Ten  Year   Test    of   State   Insurance — Unfavorable    Ex- 
perience. 

As  throwing  some  light  on  the  subject  of  State  insurance,  th* 
operations  during  the  last  ten  years  of  the  government  bureau  for  in- 
suring those  engaged  in  military  service  is  not  without  interest. 

Beginning  in  a  small  way  in  1874,  the  Swiss  government  thereafter 
gradually  extended  the  relief  offered  to  those  who  become  ill  or  dis- 
abled while  in  the  military  service.  During  the  period  1889-1894,  the 
State  insured  such  military  risks  in  one  of  the  larger  private  Swiss 
insurance  companies  with  very  satisfactory  results,  as  was  frankly 
stated  in  the  National  Assembly.  Nevertheless,  the  officials  came  to 
the  conclusion  that  it  was  undignified  for  the  government  to  employ  a 
private  agency,  and,  from  1895  on,  conducted  this  branch  of  insurance 
for  account  of  the  government  direct. 

In  1898  a  new  proposal  was  made  to  increase  the  rate  of  compensa- 
tion to  be  paid  to  soldiers,  who  suffered  injury  or  incurred  sickness  or 
disability  during  the  time  of  their  military  service,  to  the  same  amount 
that  an  industrial  establishment  would  have  to  pay  to  one  of  its  em- 
ployees in  like  circumstances.  The  advocates  of  the  measure  asserted 
that,  based  on  the  most  careful  estimates,  the  increased  cost  of  this 
extra  insurance  would  not  exceed  100,000  francs  a  year.  In  place 
of  an  annual  average  outlay  of  64,000  francs,  the  government  experts 
confidently  predicted  that  164,000  francs  would  suffice  to  meet  all 
charges  in  the  course  of  the  year  under  the  proposed  act.  Accordingly, 
on  these  representations,  the  Swiss  Parliament  adopted  the  proposed 
law;  and  it  took  effect  January  1st,  1902. 

Hardly  had  the  new  law  gone  into  operation  before  it  was  seen  that 
the  estimates  of  its  cost  were  absolutely  untrustworthy  and  too  low. 
In  the  very  first  year  after  its  passage,  an  extra  credit  of  500,000  francs 
had  to  be  voted,  in  addition  to  the  165,000  francs  provided  in  the  gov- 
ernment budget.  How  far  the  authorities  erred  in  the  figures  they 
submitted,  namely,  165,000  francs,  is  best  shown  by  the  following  table 
of  the  actual  cost  of  the  insurance  of  the  Swiss  military  establishment 
for  the  10-year  period  beginning  with  January  1st,  1902. 

Insurance  cost. 

1902 fr.  680,000  1908 fr.  850,000 

1903 "  807,000  1909 "  893,000 

1904 "  787,000  1910 "  1,017,000 

1905 "  836,000  1911 "  1,316,000 

1906 "  879,000  Average "  894,000 

1907 "  876,000 

In   the   original   government   estimate,   the   sum   of   116,500  franen 

7i 


waa  deemed  sufficient  to  meet  all  payments  required  on  account  of  ac- 
cident or  disability  cases.  The  actual  average  amount  required  for  the 
10-year  period  has  proved  to  be  351,000  francs,  the  least  in  any  girea 
year  being  220,000  francs  and  the  highest  (in  1911)  being  607,000 
francs.  In  the  department  of  sickness  insurance,  the  showing  is  even 
worse.  In  place  of  an  anticipated  annual  outlay  of  36,000  francs,  the 
amount  expended  has  run  beyond  that  required  for  disability  cases  and 
in  1911  reached  the  total  of  614,000  francs.  Administration  costs  have 
likewise  far  exceeded  the  original  estimates  and  show  a  steady  in- 
crease from  year  to  year,  having  risen  from  33,000  francs  in  1902  to 
69,000  in  1911. 

Most  of  these  figures  are  clearly  set  forth  in  a  message  dated  No- 
vember 12th,  1912,  addressed  by  the  Bundesrat,  or  governing  council, 
to  the  Swiss  National  Assembly.  The  increased  cost  is  ascribed  in 
part  to  the  higher  indemnity  rates  paid  under  the  new  law,  which  have 
induced  more  of  the  well-to-do  soldiers  to  apply  for  relief  than  was  the 
case  with  the  small  amounts  previously  doled  out,  and  secondly,  to  the 
simulation  and  exaggeration  of  illnesses  and  accidents.  Thus  the  gov- 
ernment counted  on  having  to  issue  only  20  permanent  pensions  a 
year,  instead  of  which  the  average  number  has  been  53.  In  one  year, 
the  figure  rose  to  129.  In  the  last  12  months  before  this  law  took  ef- 
fect, 2,908  cases  of  sickness  were  reported,  entailing  47,010  days  of 
illness,  whereas  in  1911  the  corresponding  figures  were  5,906  cases  and 
109,474  days. 

Whatever  may  be  the  true  causes  for  its  unexpected  and  costly  re- 
sults, the  experience  of  the  government  in  the  branch  of  military  in- 
surance makes  a  very  unfavorable  showing.  The  losses  to  be  met  proved 
from  the  start  to  be  four  times  as  great  as  had  been  counted  on,  and 
are  constantly  rising — although  the  size  of  the  army  has  remained 
about  the  same.  Simulation  of  illnesses  and  exaggeration  of  injuries 
are  rife;  and  the  officials  are  unable  to  make  any  headway  against 
these  abuses.  This  chapter  of  Swiss  State  insurance  has  only  added 
to  the  misgivings  of  those  who  so  strongly  opposed  the  introduction 
of  the  system  of  compulsory  accident  insurance  to  be  carried  on  by  the 
State  alone  without  any  outside  competition.  Will  the  State  make  a 
better  showing  when  it  comes  to  handling  this  new  class  of  risks  or 
will  the  outcome  be  as  similarly  unfortunate  and  costly  for  the  govern- 
ment finances  as  in  the  case  of  the  insurance  granted  to  those  in  its 
military  service?  This  is  a  question  which  must  be  left  to  time  and 
experience  for  an  answer. 


Photomount 
Pamphlet 

Binder 
Gaylord  Bros. 

Makers 
Stockton,  Calif. 

PAT.  JAN.  21.  1908 


678980 

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